• Grayscale’s Bitcoin Trust (GBTC) has seen its discount to net asset value (NAV) widen to near-record highs.
• The discount has been increasing since news of Digital Currency Group (DCG)’s exposure to disgraced crypto exchange FTX was reported last week.
• Shares of GBTC are currently trading at a 47% discount to NAV, the widest discount since late December 2022.
Grayscale’s Bitcoin Trust Discount Widens
Grayscale’s Bitcoin Trust (GBTC), the world’s largest publicly traded bitcoin fund, has seen its discount to net asset value (NAV) widen to near record highs. The shares are currently trading at a 47% discount to NAV, the widest discount since late December 2022. This comes as the Financial Times reported last week that Digital Currency Group (DCG) started selling holdings in several investment vehicles run by Grayscale at a steep discount, according to U.S. securities filings.
Decrease in Price of Bitcoin
Bitcoin was up 40% in January, but has since retreated slightly, losing 9% for the month to date. Sheraz Ahmed, managing partner at Storm Partners said „there has been a significant surge in the price of bitcoin recently“, which may have undermined the value of GBTC and forced Grayscale to decouple it from bitcoin’s price movements.
FTX Disgrace
The initial plunge in GBTC’s share price came after news of Genesis‘ and DCG’s exposure to disgraced crypto exchange FTX was published on Feb 7th 2021 when the discount was 43%. Shares of GBTC have not traded at a premium since March 2021 according to TradeBlock data.
Grayscale Fights on Multiple Fronts
Ahmed noted that „Grayscale is fighting a battle on many fronts with some of the most influential minds in crypto,“ but expects „the bitcoin trust to find calmer waters.“ However he warned that “nobody saw the disaster of FTX before it was too late“ and “the fall of Grayscale could have a similar impact“.
Conclusion
Overall this article explains how Grayscale’s Bitcoin Trust’s (GBTC) discounts widened significantly due to both exposure from DCG’s connection with FTX combined with decreasing prices in bitcoin over recent weeks leading potential investors wary about investing into bitcoin trusts managed by Grayscale Investments or any other company associated with DCG/FTX scandal