The leading crypto Bitcoin (BTC) is trading at $ 16,600 in global markets. However, Grayscale’s Bitcoin price dropped to $9,000. Meanwhile, the leading altcoin Ethereum is changing hands in the market at $1,207. However, Ethereum price dropped below $700 on Grayscale.
Bitcoin and Ethereum historical bottoms on Grayscale
In Grayscale, where a Bitcoin is over $ 9,000, the return to 2017 continues at full speed. He first saw this price level about five years ago.
GBTC price, November 2022Going to $660 on the Grayscale Ethereum Trust (ETHE), Ethereum is 45% below the global market price of $1,200. So on this platform, Ethereum is also not doing much better than Bitcoin.
ETHE price, November 2022These prices make 2022 the worst year ever for Grayscale trusts since they were first launched in 2013. By the way, sentiment worsened after Genesis paused withdrawals, as you follow on Kriptokoin.com.
Genesis factor in Grayscale Bitcoin Trust
Like Grayscale, they are a subsidiary of the Digital Currency Group (DCG). Genesis had a $170 million exposure to FTX. But given DCG’s vast assets, you’d think these are little potatoes. Perhaps he could afford that $170 million, as its CEO, Barry Silbert, is worth $2 billion. However, their failure to do so so far may indicate DCG is running a tighter ship than it seems.
The growth in their products has stopped. It even narrowed as the bears started biting as the sharks jumped from project to project to see what would drop. Grayscale made the following statement:
Due to security concerns, we do not make such on-chain wallet information and confirmation information publicly available through a cryptographic Proof of Reserve or other advanced cryptographic accounting procedure.
This was a bit of a joke. Because public key cryptography means you can securely share your public key. However, that’s the policy of Coinbase, their custodian, not Grayscale’s. Coinbase has always refused to publish their public address. Also, unlike many other exchanges that have one or several large cold wallets, Coinbase divides their wallets into tons of addresses with 5,000 to 10,000 BTC balances.
A few years ago they might have been difficult to find. However, we’d be surprised if some on-chain analysts these days didn’t properly map them out in all their glory. If the public really wanted such a Proof of Reserve, they could therefore draw nice graphs of all addresses with balances of exactly 5,000 or 10,000 and label them as Coinbase.
However, this has always been Coinbase’s policy of security through privacy. However, no one is seriously speculating that GBTC does not own 633,000 Bitcoins. But proof of such things needs to be better than “trust us”. The speculation, anyway, is whether they will have to destroy more trust.
What challenges does GBTC face?
As you know, a trust is a tool from the Chancellery where the holder has obligations to the legal owner. In this case, although the ownership of the coins is in Grayscale, they have obligations to the actual owners of the coins, GBTC shareholders. Therefore, Grayscale should act in their best interests to provide an ETF conversion for the trust, with the question of whether it would be in their best interest to dissolve the trust, especially when there is an alternative to suing the SEC.
Whether the ETF conversion is better for these shareholders is also debatable. Since Grayscale charges a 2% annual management fee, they will not effectively terminate their business unless they absolutely have to. But segmenting Genesis Capital turned out to be much more difficult than they initially thought. DCG tried to portray Genesis Capital as something completely different, isolated. However, in the market, the withdrawal pause in Genesis is reflected in DCG, Grayscale and all their other products. Because they own or share the same owners.
It is also not clear why they allow this discount to reach such extremes. This is not entirely new as Grayscale is trying to do something about it by purchasing $750 million worth of GBTC last year. However, the discount has since gotten worse. So the company is having some difficulties to see if the sharks will bounce from here as its lending unit has suspended normal operations.
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