On Thursday, shares of Grayscale Bitcoin Trust (GBTC), the biggest bitcoin fund in the world, reached a record-high discount rate of about 50% in relation to the price of bitcoin (BTC).
Through GBTC, investors may access bitcoin through a conventional investment structure. Data from cryptocurrency index provider TradeBlock shows that the discount rate for GBTC was 47.3%.
“It’s terrible for GBTC investors that Grayscale’s Bitcoin Trust is currently selling at a discount of close to 50%. It truly emphasises the significant structural quality variations between various investment vehicles, according to Bradley Duke, co-CEO of ETC Group, in a message to CoinDesk.
The trust has been surrounded by increasingly negative attitude over the last several weeks as worries about the possibility of bankruptcy spread around the cryptocurrency trading company Genesis Global Trading, which is controlled by Grayscale’s parent company, Digital Currency Group (DCG). CoinDesk’s parent firm is also DCG.
Genesis Global Trading declared on Nov. 16 that it will stop allowing client withdrawals from its lending division, Genesis Global Capital, in response to the collapse of the cryptocurrency exchange FTX. Genesis stated in a message to customers on Wednesday that a settlement of the loan unit’s withdrawal freeze is expected to be a matter of “weeks” rather than days, amid rumours of a potential lawsuit.
One theory circulated on Twitter suggested that the eventual liquidation of GBTC due to a series of liquidity problems at DCG subsidiaries might result in a large dump of bitcoin on the open market.
Some even argued that Grayscale hadn’t publicly demonstrated its GBTC fund reserves.
Since March 2021, GBTC shares have not traded at a premium to bitcoin. The trust traded at a double-digit premium to its net asset value before that time due to high institutional demand.
Hedge fund Fir Tree said on Tuesday that it is suing Grayscale to get information on GBTC so that it may look into any conflicts of interest and poor management. The company claimed it wanted Grayscale to reduce its 2% fees for the trust and resume redemptions.
