Skip to content Skip to sidebar Skip to footer

Grayscale Digital Currency Funds Are Trading 34-69% Below Nav

Digital Currency Funds:

The company manages digital assets worth more than $14.7 billion through various OTC investment vehicles.

Seven digital currency funds produced by asset manager Grayscale Investments are currently trading at a discount of 34% to 69% to their net asset value, or NAV, according to data collected by data aggregator YCharts. The Grayscale Bitcoin Trust, Ethereum Trust, Ethereum Classic Trust, Litecoin Trust, ZCash Trust, Horizen Trust, Stellar Lumens Trust, and Livepeer Trust are among the holdings monitored in the report.

The Grayscale Stellar Lumens Trust has the lowest discount to NAV at 34%, and the Grayscale Ethereum Classic Trust has the most significant value to NAV at 69%. All the funds follow the performance of the cryptocurrencies that bear their names.

Average Discount :

The average discount to NAV shared by funds in the group at publication is 50%. The Grayscale Bitcoin Trust (GBTC), the largest holding with $10.6 billion in digital assets under management but just $5.59 billion in net liquidation value for its shares, is close to this discount value. The Grayscale Ethereum Trust, which is now holding $3.75 billion in ETH, is likewise trading at a 50% discount.

The United States has not approved the investment vehicles used by Grayscale. Exchange-traded funds (ETFs), which are regulated by the Securities and Exchange Commission (SEC), are traded over the counter (OTC). Previously, because of increased investor demand during the crypto bull market, its funds, such as GBTC, sold at a premium.

However, many failures have turned investors’ perceptions of its investment vehicles around. After the SEC denied the company’s request to list GBTC as an ETF on June 29, Grayscale filed an ongoing lawsuit against the SEC, alleging that the plan failed to show how it was “intended to prevent fraudulent and manipulative activities and practices.” The legal representative for the company predicted that the trial might go up to two years.

Second, amid the crypto winter, Grayscale’s parent company Digital Currency Group has been the target of insolvency rumors, particularly after its subsidiary Genesis Global halted withdrawals on November 16 in response to “unprecedented market turmoil” by the failure of problematic cryptocurrency exchange FTX.

Final Value:

In response to users’ request for a proof-of-reserves audit, Grayscale withdrew from a full on-chain disclosure due to security concerns. Instead, the company distributed a document from Coinbase Custody confirming the worth of its holdings. Grayscale’s total value of digital currencies in its OTC funds is $14.7 billion.

Leave a comment