GBTC Bitcoin discount nears 50% on FTX woes as investors stock up

0
5

Bitcoin’s (BTC) largest institutional investment vehicle is under suspicion as it trades at a record discount.

The Grayscale Bitcoin Trust (GBTC) is the latest Bitcoin industry to feel the heat of the debacle over defunct exchange FTX.

FTX woes see Coinbase pledge faith to GBTC owner

With contagion and fears of a deeper market failure all over Bitcoin and altcoins these days, doubts are affecting even the most well-known – and trusted – crypto industry names.

In recent days, it was the turn of GBTC, the long-controversial Bitcoin investment fund, amid problems at a related crypto firm, Genesis Trading.

As reported by Cointelegraph, the parent company Digital Currency Group (DCG), as well as the operator Grayscale itself, quickly sought to reassure investors and the market that its flagship product is financially unsound.

This did not seem enough to satisfy nerves, however, leading to further public statements of confidence in DCG and GBTC.

Among them was Coinbase Institutional, the institutional investment arm of major exchange Coinbase.

“Nothing is more important than making sure our clients’ assets are safe,” it tweeted November 17th.

“With 10 years of expertise building a secure and compliant custody solution, Coinbase Institutional is proud to provide separate cold storage services with our Qualified Custodian.”

GBTC’s image has been strained for some time. Since 2021, it has traded at a discount to the spot price of BTC, a discount that is now approaching 50%.

71330332 e27d 4496 8fe5 c2fe87b6433d
GBTC premium vs asset holdings vs BTC/USD chart. Source: Coinglass

Amid a lack of demand, speculation has increased thanks to rumors that Grayscale may end up being bought should Genesis Trading fail.

This change of pace could have implications for GBTC, as Grayscale allegedly continues to intend to convert it to an exchange-traded fund (ETF).

“While this is a difficult time for many in crypto, I am deeply optimistic about the future of this industry, Grayscale’s business and the opportunity for investors,” Michael Sonnenshein, CEO of Grayscale, tweeted November 19th.

Investor Lepard: “I bought more” GBTC shares

Agreement on the USD 10.5 billion GBTC possibly forcibly sold remains tenuous.

Related: Grayscale cites security concerns to retain on-chain proof of reserves

“Genesis may go down, but I find the odds of GBTC trust being liquidated are very unlikely just because of the cash cow that it has been,” Lyle Pratt, creator of messaging platform Vida Global, reacted.

“It’s more likely that someone like Fidelity buys it and keeps it running.”

b3629c2f 53f5 48e5 b77c 162a0760418a
Grayscale BTC holdings vs BTC/USD chart. Source: Coinglass

The increasing discount following the FTX saga meanwhile made GBTC a somewhat ironic “buy” for names such as ARK Invest and Lawrence Lepard, investment manager at Equity Management Associates.

“Lots of questions and DMs. A leopard’s view of Grayscale and GBTC Spoiler alert: I own it,” he began devotedly Twitter thread saying over the weekend.

“I bought more. It’s still less than 5% of my BTC holdings if I’m mistaken. Self-sovereign key ownership is a must. And top priority.”

673aeaa6 4df5 4efa 9cf7 80ecd3ecc1f8
Combined Holdings of Grayscale Bitcoin Trust (GBTC) for ARK Invest ETFs (screenshot). Source: Cathiesark.com

On the subject of how bad the contagion could be for DCG and its family of companies, Leopardo, however, acknowledged that “it’s impossible to know how much trouble they are in.”

He continued to analyze the fallout if the worst case – bankruptcy – occurred.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and business move involves risk, you should do your own research when making a decision.