January 27, 2023

The Grayscale Bitcoin Trust (GBTC) is selling at a discount of 48.62%, worrying investors and analysts. They believe a sell-out is imminent as DCG is also facing financial difficulties.

The crypto community is seeing its fears mount as Grayscale’s GBTC is nearly 50% off. As of December 9, the GBTC discount or premium to NAV is 48.62%. The GBTC shares are trading at $8.03.

Can the GBTC discount trigger a sale?

Market analysts and the general crypto community fear that the discount could trigger a sell-off. One of the main reasons for his concern is the fact that sister company Genesis stopped recording after the collapse of FTX.

Parent company Digital Currency Group also has nearly $2 billion in debt, with almost $1.7 billion owed to Genesis. Ram Ahluwalia, CEO of Lumida Wealth, believes that DCG used its GBTC shares as collateral in the Genesis loan.

Ahluwalia also says DCG has “enough revenue-generating power to absorb these liabilities and losses.” He does not see insolvency risk as a likely outcome. However, he noted that if Bitcoin falls further, the company could be in trouble.

DCG in a tight spot

The Digital Currency Group has been in the news this month – in trouble because of the Grayscale incident. Bernstein stated that DCG had a few different options on the table. It can raise capital, dissolve GBTC trust or sell non-strategic assets and bail out Grayscale.

Analysts Gautam Chhugani and Manas Agrawal noted that the structure of the GBRC trust protected holders “and remains shielded from failures within DCG or DCG group entities.” Still, investors are concerned about the status of GBTC and whether it could lead to further market downturns.

SEC asks crypto companies to disclose details

The US Securities and Exchange Commission (SEC) is also getting involved in the debate about these crypto financial institutions. The agency has asked crypto companies to disclose details related to the crypto winter and the collapse of several companies to investors. It has issued guidelines for this.

In general, it wanted these companies to disclose information about material exposure to companies in financial difficulty in the marketplace. It’s a big move from the SEC, which had made it a point to keep a close eye on the crypto market since early 2022.

Meanwhile, the SEC is investigating FTX, which is at the heart of many of the market’s financial problems. However, a pro-crypto legislator blamed SEC Chairman Gary Gensler for the stock market’s collapse.

disclaimer

BeInCrypto has reached out to the company or individual involved in the story to get an official statement on recent developments, but it has not yet heard back.

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