- Recent fund reports have exposed rumors about Grayscale’s GBTC trust fund.
- A Bloomberg report claims that the GBTC trust fund is the most important investment product in DCG regardless of investors’ concerns about the trust fund.
Leading cryptocurrency asset management company Grayscale Investments is experiencing problems with its most popular investment product Grayscale bitcoin Trust (GBTC), according to multiple reports. Investors are concerned about various issues, especially the fund’s recent trading position. Recent chain data shows that the GBTC reward rate fell to 47.8 on Friday (an all-time low).
Also read: Will Grayscale be the next FTX? Genesis owes $1.8 billion to companies and customers
The drop indicates the trust fund is trading at a steep discount, suggesting investors are losing faith in Grayscale’s financial products. However, the Bloomberg report revealed that this trend reflects the attitude of investors towards the cryptocurrency market amid the ongoing cryptocurrency winter.
The report added that this trend is unlikely to change anytime soon, as the downward trend surrounding the GBTC stock will only change once the crypto winter is over. Also, there is a lot of bad news about the digital currency group, the parent firm of Grayscale.
Last month, Genesis Global Capital (a crypto lending firm), a subsidiary of Digital Currency Group (DCG), announced that it would stop withdrawing after FTX suffered a bankruptcy. Although Grayscale has repeatedly claimed it was unaffected by the liquidity problems that plagued Genesis, many investors remain unconvinced.
Market situation
So it’s no surprise that Grayscale’s investment products have underperformed. As of this writing, Grayscale’s premium is currently at negative 48.62 percent. It is an indicator of its continued decline. As investor fear deepens after recent concerns, confidence will continue to trade at more massive discounts, indicating stronger selling pressure on GBTC than BTC itself.
The value of the leading digital asset has fallen by 64 percent since January 2022, compared to GBTC, which has lost 75 percent in value. At the current discounted rate, the trust’s investors are selling their BTC at about 50 percent below its current value. is a leading digital asset.
With a top hedge fund (Fir Tree Capital Management) filing a court order against Grayscale earlier this week, Grayscale’s troubles seem endless. According to the lawsuit, Fir Tree Capital accuses Grayscale of mismanaging the GBTC trust. As such, he is seeking permission from the court to access Grayscale’s financial records and conduct a more detailed investigation. The hedge fund also claims that Grayscale is not transparent with its 850,000 shareholders.
The most important product in DCG
Meanwhile, a Bloomberg report claims that the GBTC trust fund is the most important investment product among DCG’s investment products, regardless of investors’ concerns about the trust fund. Grayscale, and additionally DCG, charge an annual fee of 2 percent from GBTC, the largest among financial products. As of this writing, the fund has $10.8 billion in assets under management.
A Bloomberg report predicts that Grayscale will receive at least $200 million annually from the GBTC trust. The GBTC annual fee is much higher than other investment products offered by Grayscale. For example, the ProShares Bitcoin Strategy ETF provides an annual fee of 0.95 percent.
In an interview with Bloomberg last month, Cathie Wood, CEO of Ark Invest (an asset management firm), explained the importance of Grayscale’s cryptocurrency trust products to the crypto ecosystem. Wood said Greyscale will make every effort to retain these crypto trusts because the firm values them greatly.
After trading GBTC at a huge discount, asset management firm Wood’s bought GBTC shares for $1.5 million on December 5. Ark Invest bought his GBTC shares when the GBTC discount rate was 45 percent. Wood’s asset management company also bought 2.8 million GBTC shares last week. The asset manager’s actions show his confidence in the GBTC trust.
