Community fears FTX implosion might affect Grayscale

1 year ago

Grayscale Bitcoin Trust (GBTC) shares are selling astatine a grounds discount of 42.69% to the underlying asset’s worth pursuing FTX’s implosion and fears of marketplace contagion.

According to Ycharts data, GBTC shares are trading for $8.75 arsenic of property time, which represents a 74% diminution connected the year-to-date metric and an 84% driblet since Bitcoin peaked astatine implicit $69,000 successful 2021. For context, BTC itself is lone down 74% from this all-time high.

Ycharts data showed that the worth of assets nether its absorption peaked astatine $43.58 cardinal successful November 2021 but is present astir $10.49 cardinal arsenic of property time. The organization Bitcoin money holds astir 3.5% of each BTC successful circulation.

Today the #Grayscale Bitcoin Trust traded astatine a 43% discount to its NAV. With #Bitcoin trading astatine $16,700, shareholders of $GBTC were consenting to merchantability their Bitcoin for the equivalent of $9,500. What does that archer you astir retail and organization capitalist assurance successful Bitcoin?

— Peter Schiff (@PeterSchiff) November 17, 2022

FTX fallout whitethorn beryllium far-reaching

The crypto assemblage has speculated that the FTX implosion mightiness person affected Grayscale’s genitor company, Digital Currency Group.

Several stakeholders person highlighted that different institution belonging to the task superior steadfast Genesis precocious halted lawsuit withdrawals owed to the FTX collapse.

Reports revealed that the crypto lender had failed successful its program to get an exigency indebtedness of $1 cardinal from investors.

Hal Press, the laminitis of North Rock Digital, highlighted this interest successful a Nov. 17 tweet wherever helium noted that determination was credible interest astir the concern of Digital Currency Group (DCG) and not conscionable Genesis.

Press explained that determination was nary rationale for DCG to question exigency backing “if the liability was connected Genesis equilibrium expanse and lone pertained to Genesis.” He said:

“Why would DCG beryllium trying to rise 1B done selling their ain equity to prevention Genesis?… The reply is that the liability sits with DCG and DCG is present astatine risk. Furthermore, it’s not wide they are worthy capable to rise the 1B by Monday and that’s the issue. What a mess.”

The Grayscale connection

The Financial Times reported that GBTC’s largest shareholder is DCG, with a 4.1% involvement and the adjacent largest holder is BlockFi, which precocious filed for bankruptcy owed to important vulnerability to FTX.

This revelation has brought fearfulness into the assemblage arsenic galore judge that a Grayscale liquidation could severely interaction the crypto market.

According to disposable data, Grayscale holds implicit 635,000 BTC worthy implicit $10 cardinal and 3.1 cardinal Ethereum, valued astatine $3.7 billion.

Press said the worst happening that could hap successful the existent concern would beryllium DCG filing for bankruptcy, Grayscale getting dissolved, and astir $9 cardinal of merchantability unit connected the 2 apical integer assets.

https://t.co/5icW45C8IJ pic.twitter.com/qieUDWz7rc

— Hal Press (@NorthRockLP) November 17, 2022

Grayscale importune each is well

Grayscale has insisted that each is good with its business. The concern fund clarified that its assets were safe, secured, and not affected by caller events, including Genesis’s caller determination to halt withdrawals.

In the aftermath of caller events, our investors should cognize that the information and information of the holdings underlying Grayscale integer plus products are unaffected.