GBTC Bitcoin Discount Closes to 50% on FTX Issues as Investor Stocks Rally

The largest institutional investment vehicle Bitcoin (BTC) is under suspicion as it is trading at a record discount.

The Grayscale Bitcoin Trust (GBTC) is the latest Bitcoin industry entity to feel the heat from the debacle on the defunct FTX exchange.

FTX woes see Coinbase pledge to trust GBTC owner

With contagion and fears about a deeper market path ubiquitous in Bitcoin and altcoins at the moment, the misgivings are affecting even the crypto industry’s most famous and trusted names.

In recent days, it’s the turn of GBTC, the long-beleaguered Bitcoin investment fund, amid troubles at a related crypto company, Genesis Trading.

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

However, this did not appear to be enough to satisfy the nerves, which led to additional public declarations of faith in the DCG and GBTC.

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

“Nothing is more important than ensuring the safety of our clients’ assets” chirp In November. 17.

“With 10 years of experience building a secure and compliant custodial solution, Coinbase Institutional is proud to offer segregated cold storage custodial services with our qualified custodian.”

GBTC’s picture has been under stress for some time. Since 2021, it has been trading at a discount to the BTC spot price, a discount now close to 50%.

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

Amid the lack of demand, speculation increased thanks to rumors that Grayscale could end up buying should Genesis Trading fail.

This change of course could have implications for GBTC, as Grayscale remains intent on converting it into an exchange-traded fund (ETF).

“Although this is a difficult moment for many in the crypto space, I am deeply optimistic about the future of the industry, Grayscale’s business, and the opportunity for investors,” said Grayscale CEO Michael Sonnenstein, chirp In November. 19.

Investor Leppard: “I bought more” GBTC shares

The consensus on a potential $10.5 billion GBTC force sale remains weak.

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

“Genesis may collapse, but I find the prospects of the GBTC trust liquidating very unlikely given the cash cow it has been,” Lyle Pratt, creator of messaging platform Vida Global, said. reaction.

“Probably someone like Fidelity would buy it and keep it running.”

Comparing BTC holdings in grayscale vs BTC/USD chart. Source: Coinglass

Meanwhile, the sharp discounting that followed the FTX saga made GBTC a somewhat ironic “buy” for names like ARK Invest and Lawrence Lepard, chief investment officer at Equity Management Associates.

Lots of questions and DM’s. Lepard offered on Grayscale alert and GBTC Spoiler: I own it,” he began dedicated Twitter topic Saying over the weekend.

“I bought more. Still less than 5% of my BTC holdings in case I’m wrong. Self-sovereign key ownership is a must. And a top priority.”

Aggregate holdings of the Grayscale Bitcoin Trust (GBTC) for ARK Invest ETFs (screenshot). Source: Cathiesark.com

On the subject of how serious the infection is for DCG and its family of affiliates, Leopard nonetheless acknowledged that it was “impossible to know how much distress they are in.”

Continue to analyze the ramifications should the worst-case scenario – bankruptcy – occur.

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