The Grayscale Bitcoin Fund (GBTC) remains the largest legal bitcoin fund in the world with hundreds of thousands of BTC in assets. However, given recent developments, the value of the fund has taken a hit. GBTC had been trading at a high premium for most of the year, but with the issues rocking Genesis Trading, which shares the same parent company with the bitcoin fund, the premium is now at an all-time high.
Grayscale Bitcoin Fund at 45.08%
As of last week’s release, the Grayscale Bitcoin Fund (GBTC) had continued to decline as uncertainty surrounded Genesis Trading and Digital Currency Group (DCD). Speculation was that the problems encountered by Genesis would trickle down to other companies under the DCG umbrella, causing them problems as well.
From Friday, the Grayscale premium to NAV reached a record level of 45.08%. This means that BTC in the Grayscale Trust was trading 45.08% below the spot price of BTC at the close of the trading day on Friday. This is the lowest ever traded by the fund since its inception.
Understandably, investors in the trust had begun to panic over this, and calls for the trust to make a public statement about their holdings intensified. Grayscale would respond, but it did next to nothing to assuage investor concerns, instead heightening them.
GBTC trading at $7.76 | Source: Grayscale Bitcoin Trust (BTC) OTC on TradingView.com
Reserves are not public
In response to investor concerns about the state of grayscale holdings, the company had decided to Twitter to purify the air. However, rather than succumb to calls to make the reserves public, Grayscale said the fund was structured not to make the reserves public.
The Twitter thread went further stating that investors’ funds were in fact safe and that BTC was held with the Coinbase crypto exchange. Additionally, the company said that all BTC held with Coinbase custodial services belonged to the single trust, presumably trying to let investors know that they had no exposure to Genesis.
As expected, Twitter didn’t believe it and word quickly spread that GBTC was not going public with its reservations. Coinbase then responded by sharing a letter outlining the BTC and ETH assets held by GBTC. This showed that GBTC held over 653,000 BTC on Coinbase’s institutional custody service.
Nonetheless, this has done little to appease investors who are still withdrawing their BTC from exchanges. Within a week, major crypto exchanges such as Binance processed over $1 billion in BTC withdrawals.
Featured image from CryptoPotato, chart from TradingView.com
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