Grayscale’s GBTC fund now trades at a discount of around 40% to its NAV due to the collapse of Sam Bankman-cryptocurrency Fried’s exchange. GBTC was selling at a margin of +40% as recent as the conclusion of 2020.
Doomsday for Bitcoin
Grayscale’s Bitcoin fund began trading at a loss for the very first occasion in January 2021, signaling a turnaround in the trend. Unfortunately, when it happened, GBTC started to decline.
According to CNN Business, the top ten shareholders in GBTC include ARK Invest (0.86%), Horizon Kinetics (0.35%), Simplify Asset Management (0.05%), Systelligence (0.05%), Parkwood (0.05%), Emerald Mutual Fund (0.04%), Rothschild Investment (0.02%), and Cathie Wood (0.02%).
Due to recent developments, Grayscale Bitcoin Trust is now among the greatest threats to the cryptocurrency sector. Due to “extraordinary market turbulence,” Genesis Global reportedly halted all disbursements for its loan company on Wednesday.
Since Genesis Global was the trust’s liquidity source, this is a cause for worry for Grayscale Bitcoin Trust. Digital Currency Group is the parent firm of Genesis Global (DCG). It is also Grayscale’s parent business. It was only a short time after Genesis’s statement before Digital Currency Group made it clear that the news wouldn’t affect their operations. According to DCG, Genesis is not an authorized service provider “for any” Grayscale product.
The business also said that neither it nor its custodian, Coinbase, engage in any Bitcoin lending, borrowing, or pledging operations. Statements and verified financial statements are also submitted to the SEC and OTC marketplaces. The recent events have not affected the functioning of Grayscale goods, and commerce is continuing as usual. Coinbase keeps the underlying securities for $GBTC and all other Grayscale products in secure, cold storage wallets.
The locals continue to complain, nevertheless. The collapse of GBTC might spell disaster for Bitcoin. Conversely, it would have been amusing to see Terra Luna fall. Currently, there are 634,000 BTC in The Grayscale Bitcoin Trust’s possession. Even though they “only” sold 80,000 Bitcoins, the Terra Luna Fund managed to send the price of Bitcoin down from $41,000 to $20,000.
DCG Is Experiencing a Cash Flow Crisis
Ryan Selkis reports that DCG is experiencing a cash flow crisis. The liquid assets of the holding company (DCG) are more than the liabilities. It suggests that DCG is actively seeking further funds. Unfortunately, the tweet has been removed.
In light of recent rumors, members of the Bitcoin community are seeking confirmation that Grayscale has over 635,000 BTC in backup at Brian Armstrong’s Coinbase. However, Grayscale and Coinbase have yet to respond. There is just a CSV data that is uploaded every day at this time.
But, according to analyst Dylan LeClair, if all BTCs are stored at Coinbase, it should be reasonably easy to generate proof of reserves. The SEC, meanwhile, is also receiving some criticism. For example, Armageddon would not be possible if chairman Gary Gensler authorized GBTC’s conversion into an ETF.
On the other hand, Gensler decided to saturate the market using paper Bitcoins instead of investing in spot Bitcoin ETFs. In addition, the FTX debacle might factor in regulators’ reluctance to greenlight a spot ETF anytime soon.
In the meantime, Chris Burniske, an associate at Placeholder and previous cryptocurrency head at ARKinvest. Posted concerns over the unraveling of ETHE and GBTC are false and an illustration of hysteria. He shared a post by Bob Loukas on Twitter, in which Loukas argued that the corporation would never dissolve since it is a cash generator.
There was a consensus among Bitcoin investors at the time of publication that Chris Burniske was correct. However, as of right now, BTC is in a holding pattern.