Plain English
NAV is the total value of a fund’s holdings, minus liabilities, divided by shares outstanding. For a spot BTC ETF, NAV = (BTC held × spot price) / shares. The market price of the ETF should trade very close to NAV — the AP arbitrage mechanism enforces this in liquid ETFs.
How it actually works
NAV is calculated end-of-day for most funds, intraday for ETFs (iNAV). The premium/discount is the gap between market price and NAV — positive premiums happen when demand outpaces creation; negative discounts when redemption can’t keep up. Persistent large gaps are a sign of structural issues (Grayscale GBTC traded at a 40%+ discount before the spot ETF conversion).
What it means for you
For HNW positions in crypto funds and ETFs, NAV tracking is the key measure of whether the wrapper is doing its job. Sub-1% intraday tracking is excellent. >2% premium or discount means you are paying for sentiment, not for the underlying — a signal to wait or arbitrage. Premiums in the GBTC era taught a generation of crypto investors this lesson the hard way.
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Educational content only. Not investment, tax, or legal advice.