Crypto Asset Manager Valkyrie to Save Grayscale Bitcoin Trust

• Following the GBTC discount to NAV increases, Valkyrie announces sponsor for Grayscale’s Bitcoin Trust.
• The fund’s discount had increased to above 45% by December 30, 2022.

Valkyrie Investments, the largest fund in the cryptocurrency industry, stated on December 28 that it had proposed to become the “sponsor and manager” of Grayscale’s Bitcoin (GBTC). Grayscale BTC is one of the biggest Bitcoin investment funds, which is now valued at 643,572 BTC ($10.6 billion).

However, Grayscale’s Bitcoin Trust has had difficulties in 2022 due to the fund’s record-high discount to net asset value (NAV). By the end of September 2022, the difference between the fund’s value and NAV has widened by more than 35% during the previous six months. Also, the discount had increased even more to above 45% by December 30, 2022. 

Valkyrie Move Towards GBTC

The Nashville, Tennessee-based asset manager, which manages about $180 million, launched the new hedge fund, Valkyrie Opportunistic Fund, on  December 30, 2022. That aims to profit from the significant discount on Grayscale Investments’ $10.5 billion GBTC asset. 

Valkyrie’s steps over sponsorship and the establishment of a new fund would improve the situation. Valkyrie fund expanding its holdings of GBTC, an objective it says it will continue pursuing on their behalf. Also, this fund appeared to be the first stage of any potential acquisition. Further, the firm will be able to obtain “the true value of the underlying Bitcoin for their investors”. 

Moreover, the Grayscale filings indicate that stockholders have minimal voting rights and no involvement in the management or governance of the trust. Recently, ARK investment management reportedly contributed an additional $1.4 million to acquire 176,945 shares of Grayscale’s Bitcoin Trust fund.