GBTC’s Discount Deepens to Near 50% – Trustnodes

One bitcoin at Grayscale’s Bitcoin Trust (GBTC) is worth 50% less than one bitcoin on global exchanges.

That’s a further increase in the discount over last month, with bitcoin’s price stuck at $9,000 on GBTC while it globally trades at $18,000.

This complete lack of recovery follows no movement on Genesis Capital, a subsidiary of the Digital Currency Group (DGC) which also owns Grayscale.

Genesis paused withdrawals last month, and since then has made no announcement nor provided any update on the situation.

They are thought to have had $1.8 billion in outstanding loans on which they have effectively defaulted with the interim CEO Derar Islim stating last week:

“At this point, we anticipate that it will take additional weeks rather than days for us to arrive at a path forward.”

Genesis lost $1.1 billion to Three Arrows Capital, a crypto hedge fund that collapsed following the fall of Luna.

That was ostensibly covered by their parent company, the Digital Currency Group, but in November Genesis revealed they had a $170 million exposure to FTX as well, the crypto exchange that has now gone bankrupt.

Genesis is thought to have a hole of $1 billion, and considering business has dried up at DGC’s bread and butter of GBTC following a year long brutal bear, liquidity may be running tight.

GBTC itself, as a trust, is a separate and shielded entity from Genesis with Coinbase confirming they hold all of the 630,000 BTC that back the trust.

Yet, the Securities and Exchanges Commission (SEC) is not giving way in a court battle to convert GBTC into an ETF.

That was the expected path, which has now hit a brick wall, with SEC arguing future based bitcoin ETFs are different as they have surveillance of CME, but not of spot crypto exchanges.

What the court will decide remains to be seen, but until then investors are not just staying out, but keep leaving.

The Trust could of course just dissolve and give everyone their bitcoin, in which case it would be a good buy, but unlike any other exchanges Coinbase has refused to reveal their cold wallets.

Blockchain analytics firms say they have about half a million bitcoins. Coinbase claims it has two million, and cited traditional audits to back their claim when we have a blockchain.

They claim security concerns with blockchain proofs, even though Kraken has been providing them since 2014 and the exchange has never been hacked as far as we are aware.

Even at such a huge discount, therefore, investors are not biting with it not too clear what it will take to change that.