Grayscale Bitcoin Trust (GBTC) shares are selling at a record discount of 42.69% to the value of their underlying assets following fears of FTX implosion and market contagion.
According to Ycharts data, GBTC shares are trading at $8.75 at the time of writing. This represents a 74% drop in the year-to-date indicator and Bitcoin has fallen 84% since its 2021 peak above $69,000. For context, BTC itself is down only 74%. From this all-time high.
chart data indicated that the value of assets under its management peaked at $43.58 billion in November 2021, but is now around $10.49 billion. An institutional Bitcoin fund holds about 3.5% of all his BTC in circulation.
today #grayscale Bitcoin Trust traded at a 43% discount to NAV.When #bitcoin Trading at $16,700, Shareholders $GBTC I happily sold my bitcoin for $9,500. What does this tell us about retail and institutional investor confidence in Bitcoin?
— Peter Schiff (@PeterSchiff) November 17, 2022
FTX’s fallout can be far-reaching
The cryptocurrency community has speculated that the FTX implosion may have affected Grayscale’s parent company, Digital Currency Group.
Multiple stakeholders have highlighted that another firm belonging to venture capital firm Genesis recently suspended customer withdrawals due to the collapse of FTX.
A cryptocurrency lender has failed to secure a $1 billion emergency loan from investors, reports have revealed.
Hal Press, founder of North Rock Digital, highlighted this concern in an article dated November 17th. Tweet He said there were genuine concerns about not only Genesis, but also the business of Digital Currency Group (DCG).
The press explained that there is no basis for DCG to seek emergency funding “if the debt is on Genesis’ balance sheet and relates only to Genesis.”he Said:
“Why would DCG try to raise 1B by selling its stock to save Genesis? It’s not clear if it’s worth enough to raise 1B by, and that’s the problem.
financial times report GBTC’s largest shareholder holds a 4.1% stake in DCG, and its next largest shareholder is BlockFi, which recently filed for bankruptcy due to its significant exposure to FTX.
The revelation has caused fear in the community as many believe a Grayscale liquidation could have a severe impact on the crypto market.
according to what is available dataGrayscale holds over 635,000 BTC worth over $10 billion and 3.1 million Ethereum worth $3.7 billion.
The Press said the worst that could happen in the current situation is DCG’s bankruptcy filing, the dissolution of Grayscale, and pressure to sell about $9 billion in the top two digital assets.
— Hal Press (@NorthRockLP) November 17, 2022
Grayscale claims that everything is fine
Grayscale claims that everything is fine.investment The fund has clarified that its assets are safe, secure and unaffected by recent events, including Genesis’ recent decision to suspend withdrawals.
Following recent events, investors should know that the safety and security of their holdings underlying Grayscale’s digital asset products have not been impacted.
— Grayscale (@Grayscale) November 16, 2022
According to the company, Coinbase stored all underlying GBTC assets in deep cold storage.
in the meantime, Kathy Wood’s Ark Investment Management remains bullish as it bought a $2.8 million stake in GBTC on Nov. 15.