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Shares of the Grayscale Bitcoin Trust (OTC:GBTC), which allows investors to gain exposure to bitcoin’s (BTC-USD) price action through a traditional investment vehicle, reached a new all-time high discount to net asset value Thursday, according to TradeBlock data.
The discount rate hit 47.8% at the time of writing, and GBTC shares haven’t changed hands at a premium to bitcoin (BTC-USD) since March 2021. GBTC shares cratered about 80% in the past year versus bitcoin’s (BTC-USD) 66% drop. The move comes as contagion effects from the recent failure of crypto exchange FTX (FTT-USD) continue spreading, adding bearish sentiment to an already troubled market.
“The fact that Grayscale’s Bitcoin Trust is now trading at nearly 50% discount is just awful for holders of GBTC. It really highlights the vast differences in structure quality between different investment vehicles,” Bradley Duke, co-CEO at crypto ETP provider ETC Group, told Seeking Alpha via email.
The lending business of crypto brokerage Genesis Global Trading, which is owned by Grayscale Investment’s parent company Digital Currency Group, halted redemptions and new loan applications shortly after FTX (FTT-USD) collapsed last month. Taking to Twitter on November 16, though, Grayscale reassured that “Genesis Global Capital is not a counterparty or service provider for any Grayscale product,” thus “recent events have had no impact on product operations.”
Earlier this week, hedge fund Fir Tree was said to be suing Grayscale to secure details regarding its flagship GBTC (OTC:GBTC) fund to determine whether mismanagement and conflicts of interest took effect. Fir Tree, which manages $3B, is seeking to use that information to drive Grayscale to resume redemptions and lower fees, Bloomberg reported, citing people familiar with the matter.
Previously, (Dec. 7) Seeking Alpha contributor The Digital Trend pointed out that “GBTC is inferior to Bitcoin, just as the gold-backed Dollar was inferior to Gold.”
Image and article originally from seekingalpha.com. Read the original article here.