Following the collapse of FTX and worries about market contagion, Grayscale Bitcoin Trust (GBTC) shares are trading at a record discount of 42.69% to the value of the underlying asset.
74 Percent Price Drop
As of press time, GBTC shares are trading for $8.75, according to data from Ycharts. This marks a 74% fall from the year-to-date figure and an 84% decline from the high of Bitcoin at over $69,000 in 2021. To put things in perspective, BTC is just down 74% from its record high.
According to Ycharts statistics, the assets under its administration reached their peak value of $43.58 billion in November 2021, but as of press time, they were only worth about $10.49 billion.
Approximately 3.5% of all Bitcoins in circulation are held by the institutional Bitcoin fund.
The parent firm of Grayscale, Digital Currency Group, may have been impacted by the collapse of FTX, according to the crypto community.
Genesis Sought Emergency Loan
Several stakeholders have highlighted that the FTX collapse caused another company owned by Genesis Venture Capital to halt customer withdrawals. The crypto lender’s attempt to secure a $1 billion emergency loan from investors was discovered to have fallen short, according to reports.
This issue was brought up by Hal Press, the founder of North Rock Digital, in a tweet he sent out on November 17. He said there was legitimate worry regarding the operations of Digital Currency Group (DCG), not just Genesis.
According to Press, DCG had no justification for requesting emergency funding, “if the liability was on Genesis balance sheet and only pertained to Genesis.”
The Financial Times reports that BlockFi, which recently declared bankruptcy due to huge exposure to FTX, is GBTC’s second-largest stakeholder behind DCG, which holds a 4.1% holding in the company.
The community has been shaken by this discovery since many people think that a Grayscale liquidation could have a negative impact on the cryptocurrency market.
According to data, Grayscale possesses 3.1 million Ethereum tokens worth $3.7 billion and over 635,000 Bitcoin worth over $10 billion. The worst scenario, according to the Press, would be a bankruptcy file by DCG, the dissolution of Grayscale, and a $9 billion sell pressure on the two largest digital assets.
Grayscale Denies Being In Trouble
According to Grayscale, everything is running smoothly for the company. The investment fund made it clear that its assets were secure, safe, and unaffected by recent occurrences, such as Genesis’s decision to restrict withdrawals recently.
The firm said Coinbase held all underlying GBTC assets in deep cold storage. Cathie Wood’s Ark Investment Management is still positive and purchased GBTC shares on November 15 for $2.8 million.
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