World’s Largest Bitcoin Fund Crashes, Hits 50% Off BTC

The Grayscale Bitcoin Trust (GBTC), the world’s largest Bitcoin (BTC) fund, hit a record 47.3% discount to the BTC price on Thursday, according to data from crypto index provider TradeBlock.

GBTC is a way for investors to gain exposure to BTC through a traditional investment vehicle.

“The fact that Grayscale’s Bitcoin Trust is now trading at almost 50% off is just terrible for GBTC holders. This really highlights the big differences in the quality of structure between the different investment vehicles,” said Bradley Duke, co-CEO of ETC Group, in a note sent to the CoinDesk🇧🇷

Bearish sentiment around confidence has deepened in recent weeks as fears surfaced that cryptocurrency firm Genesis Global Trading, owned by Grayscale’s parent company Digital Currency Group (DCG), could file for bankruptcy.

On November 16, amidst the crisis generated by the crash of the FTX exchange, Genesis Global Trading announced that it would stop withdrawing customers from its lending unit, Genesis Global Capital. On Wednesday, the company disclosed that a resolution on freezing withdrawals from the lending unit would likely take “weeks” rather than days.

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There was also speculation on Twitter that a cascade of liquidity issues at DCG subsidiaries could lead to the liquidation of GBTC, which could lead to a huge amount of Bitcoin dumping on the open market.

There were even some complaints that Grayscale had not transparently proved its reserves in the GBTC fund.

GBTC shares have not traded at a premium to Bitcoin since March 2021. Prior to that date, the fund benefited from strong institutional demand and traded at a double-digit premium to its net asset value.

On Tuesday, hedge fund Fir Tree said it was suing Grayscale for details about the GBTC and to investigate mismanagement and conflicts of interest. The hedge fund said it wants Grayscale to resume redemptions and cut its 2% fees for the fund.

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