Crypto analysts are speculating on the reason, but the added pressure comes after Genesis Global Capital, a branch of Digital Currency Group (DCG), owner of Grayscale Investments, which manages GBTC, announced this week that it stop customer withdrawals from his loan unit — resulting from the fallout from the collapse of Sam Bankman-Fried’s FTX crypto empire. (CoinDesk is an independent subsidiary of Digital Currency Group, known as DCG.)
Grayscale Investments reassured investors Wednesday that Genesis was “not a counterparty or service provider for any Grayscale product” and that Grayscale products would “continue to operate as usual.”
GBTC shares have not traded at a premium to underlying bitcoin since March 2021, according to data from Coinglass, and the the discount has expanded this year as well as the distress in the crypto markets and the refusal of the United States Securities and Exchange Commission to authorize a conversion of the fund into an exchange-traded fund.
GBTC is an investment vehicle that allows US investors to gain exposure to BTC price movements without buying the asset itself. Crypto fund Three Arrows Capital was a big holder of GBTC, and told Bloomberg in July that premium arbitrage was one of the factors that led to its collapse earlier this year.
For some investors, the recent widening of the discount may have made the vehicle even more attractive: Bloomberg reported that Cathie Wood’s Ark Investment Management purchased over 315,000 shares worth approximately $2.8 million worth of GBTC stock earlier this week.