According to statistics from data aggregator YCharts, some Bitcoin and altcoin funds issued by asset manager Grayscale Investments are currently discounted between 34 percent and 69 percent to their net asset value (NAV). Here are the details…
High discount on Grayscale’s Bitcoin and altcoin funds
The situation does not look good for the funds in Grayscale, which, as we have reported as Cryptokoin.com, are facing concerns that they are indirectly affected by the collapse in FTX. Bitcoin and some altcoin funds are trading at a high discount, according to YCharts. Assets tracked in the analysis include the Grayscale Bitcoin Trust; There are Ethereum Trust, Ethereum Classic Trust, Litecoin Trust, ZCash Trust, Horizen Trust, Stellar Lumens Trust and Livepeer Trust.
All funds track the performance of cryptocurrencies of the same name; Grayscale Stellar Lumens Trust has the lowest discount in terms of NAV at 34 percent. The Grayscale Ethereum Classic Trust has the highest discount in terms of NAV at 69 percent. Currently, the average NAV discount shared by funds in the group is 50 percent. This equates to $10.6 billion in terms of managed crypto assets.
But with a net liquidation value of just $5.59 billion, it’s close to the discount value of the largest holding, the Grayscale Bitcoin Trust (GBTC). Meanwhile, the Grayscale Ethereum Trust, which holds $3.75 billion in Ethereum (ETH), is trading at a 50 percent discount.
Grayscale enters legal battle with SEC
Grayscale’s investment vehicles are not approved by the U.S. Securities and Exchange Commission (SEC) as exchange-traded funds (ETFs) and thus over-the-counter (OTC). Previously, funds like GBTC were trading at a premium in the crypto bull market due to increased investor demand. However, a series of setbacks seems to have reversed investor sentiment regarding investment instruments.
First, the SEC turned down the firm’s application to list GBTC as an ETF. On June 29, he rejected the proposal, citing that it did not show that it was “designed to prevent fraudulent and manipulative acts and practices.” Grayscale responded with an ongoing lawsuit against the SEC. The firm’s legal officer estimated that the case could take up to two years.
Bankruptcy rumors surfaced due to FTX
Second, Grayscale’s parent company, Digital Currency Group, is swamped with rumors of bankruptcy in the midst of the crypto winter, especially after its subsidiary Genesis Global halted withdrawals on Nov. shaken.
Finally, Grayscale cited security concerns in response to users’ request for a proof-of-reserve audit. For this reason, he could not make a full statement with on-chain data. Instead, the firm shared a letter from Coinbase Custody showing the value of its holdings. In total, Grayscale currently has $14.7 billion worth of cryptocurrencies under management in OTC funds.
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