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GBTC Bitcoin Discount Nears 50% on FTX

GBTC Bitcoin Discount Nears 50% on FTX – As a result of the record discount at which it trades, the Bitcoin (BTC) institutional investment vehicle that is the largest in the world is drawing scrutiny.

The Grayscale Bitcoin Trust (GBTC) is the latest organisation in the Bitcoin sector to feel the heat caused by the scandal involving the now-defunct exchange FTX.

Due to FTX’s problems, Coinbase has decided to place their faith in the GBTC owner

Misgivings are affecting even the most well-known and trusted names in the cryptocurrency industry as a result of the current widespread contagion and fears over a deeper market rout in Bitcoin and alternative cryptocurrencies.

In recent days, the Bitcoin investment fund known as GBTC became the latest victim of the ongoing issues plaguing a linked cryptocurrency business known as Genesis Trading.

According to a report by Cointelegraph, the parent firm Digital Currency Group (DCG) and operator Grayscale itself moved quickly to convince investors and the public that their main product was financially sound.

However, this did not appear to be sufficient to calm people’s nerves, which resulted in additional public declarations of faith in DCG and GBTC.

Coinbase Institutional, the institutional investing arm of leading cryptocurrency exchange Coinbase, was one of these companies.

On November 17, it tweeted, “Nothing is more essential than protecting the safety of the assets belonging to our customers.”

The reputation of GBTC has been in jeopardy for some time now. Since 2021, it has been traded at a discount to the current price of BTC, and that discount is becoming closer and closer to 50% presently.

GBTC premium vs. asset holdings vs. BTC/USD chart. Source: Coinglass

The lack of demand has led to a rise in speculation, which has been fueled by reports that Grayscale may be acquired in the event that Genesis Trading is unsuccessful.

This shift in strategy may have repercussions for GBTC, given that Grayscale is ostensibly still committed to the idea of transforming it into an exchange-traded fund (ETF).

On November 19, Michael Sonnenshein, CEO of Grayscale, tweeted, “Though this is a difficult moment for many in crypto, I am deeply optimistic about the future of this industry, Grayscale’s business, and the opportunity for investors.” Sonnenshein was referring to the current state of the cryptocurrency market.

GBTC investor Lepard said, “I have been buying more” shares recently

The lack of consensus surrounding the likely forced sale of GBTC worth 10.5 billion dollars continues.

When asked about the possibility of the GBTC trust being liquidated, Lyle Pratt, the founder of the messaging platform Vida Global, responded by saying, “Genesis may fail, but I feel the odds of GBTC trust being liquidated to be quite improbable merely given the cash cow that it has been.”

Grayscale BTC holdings vs. BTC/USD chart. Source: Coinglass

The deepening discount that came as a result of the FTX drama has, in the meantime, made GBTC a somewhat ironic “buy” for companies with names like ARK Invest and Lawrence Lepard, investment manager at Equity Management Associates.

“Many inquiries and direct messages. Lepard’s perspective on grayscale and GBTC.” “Spoiler alert: I own it,” he said to start off a devoted Twitter thread over the weekend.

Combined Holdings of Grayscale Bitcoin Trust (GBTC) for ARK Invest ETFs (screenshot). Source: Cathiesark.com

Leopard admitted that it is impossible to know how much distress DCG and its family of firms are in despite the fact that he was asked about the potential severity of the contagion’s impact on DCG and its family of companies.

He continued to examine the repercussions of the worst-case scenario, which was for the company to go bankrupt.

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