Shares of Grayscale Bitcoin Trust (GBTC) were negatively impacted by the explosion of FTX. It is being sold at a record 42.69 percent discount to the value of the underlying asset, following fears of the boom being hit by the market. Here are the details…
Big drop in Grayscale’s Bitcoin trust fund
GBTC shares are trading at $8.75, according to Ycharts data. This marks a 74 percent drop in the year-to-date measurement. It also represents an 84 percent drop since Bitcoin hit above $69,000 in 2021. cryptocoin.com As we reported, BTC itself is down 74 percent from its all-time high. The decrease in GBTC premium is more than BTC itself.
Today the #Grayscale Bitcoin Trust traded at a 43% discount to its NAV. With #Bitcoin trading at $16,700, shareholders of $GBTC were willing to sell their Bitcoin for the equivalent of $9,500. What does that tell you about retail and institutional investor confidence in Bitcoin?
— Peter Schiff (@PeterSchiff) November 17, 2022
Ycharts data shows that the value of assets under Grayscale’s management peaked at $43.58 billion in November 2021. However, as of now, it showed that this amount is around 10.49 billion dollars. The institutional Bitcoin fund holds roughly 3.5 percent of all BTC in circulation.
Has Digital Currency Group been affected by the FTX collapse?
The crypto community speculates that the FTX boom may have affected Grayscale’s parent company, Digital Currency Group. Several people underlined that another company owned by venture capital firm Genesis recently stopped withdrawals due to the FTX collapse. Reports revealed that the crypto lending platform failed in its plan to obtain $1 billion in emergency loans from investors.
Hal Press, founder of North Rock Digital, highlighted this concern in a tweet on November 17. He noted there was a concern here about the business of not just Genesis, but Digital Currency Group (DCG). Press clarified that there was no reason for DCG to seek emergency funding “if the liability is on the Genesis balance sheet and only if it relates to Genesis.” He then used the following phrases:
Why would DCG try to raise 1 billion by selling its own equity to save Genesis? The answer is that the responsibility lies with DCG and DCG is now at risk. It’s also unclear whether they have enough funds to raise the 1 billion by Monday, and that’s the problem. What kind of mess is this?
https://t.co/5icW45C8IJ pic.twitter.com/qieUDWz7rc
— Hal Press (@NorthRockLP) November 17, 2022
Grayscale connection: They have 10 billion dollars in Bitcoin
The Financial Times stated that the largest shareholder of GBTC is DCG with a 4.1 percent stake. Reportedly, the next largest shareholder is BlockFi, which has recently filed for bankruptcy due to significant exposure to FTX. This statement brought fear to the community as many believed that a liquidation in Grayscale could seriously impact the crypto market.
According to available data, Grayscale holds more than 635,000 BTC worth over $10 billion. He also owns 3.1 million Ethereum worth $3.7 billion. Press said the worst that could happen in the current situation would be DCG’s filing for bankruptcy, Grayscale’s dissolution and nearly $9 billion in selling pressure on the top two cryptoassets.
Grayscale insists all is well
Grayscale insisted that everything was fine at work. The mutual fund said its assets are safe. He also clarified that Genesis was unaffected by recent events, including its decision to cease withdrawals. The firm said that Coinbase keeps all of its core GBTC assets in a cold wallet. Meanwhile, Ark Investment Management, led by Cathie Wood, purchased GBTC shares for $2.8 million on November 15. Thus, it continues to rise.
https://twitter.com/Grayscale/status/159288214390611488
