February 3, 2023

According to statistics sourced from data aggregator YCharts, seven digital currency funds issued by asset manager Grayscale Investments are currently discounted from 34% to 69% to their net asset value, or NAV. Holdings tracked in the analysis include the Grayscale Bitcoin Trust; Ethereum Trust, Ethereum Classic Trust, Litecoin Trust, ZCash Trust, Horizen Trust, Stellar Lumens Trust and Livepeer Trust.

All funds track the performance of their namesake cryptocurrencies, with the Grayscale Stellar Lumens Trust having the lowest discount to NAV at 34% and the Grayscale Ethereum Classic Trust having the highest discount to NAV at 69%.

At the time of publication, the average discount to the NAV divided by the group’s funds is 50%. This is close to the discount value of the Grayscale Bitcoin Trust (GBTC), the largest holding company with $10.6 billion in digital assets under management but only $5.59 billion in equity net asset value. Meanwhile, the Grayscale Ethereum Trust, which holds $3.75 billion in Ether (ETH), is also trading at a 50% discount.

Related: GBTC ‘elevator to hell’ sees Bitcoin spot price approaching 100% premium

Grayscale’s investment vehicles are not approved by the U.S. Securities and Exchange Commission (SEC) as exchange-traded funds (ETF) and thus trade over-the-counter (OTC). Previously, its funds such as GBTC traded at a premium during the crypto bull market due to increased investor demand.

However, a series of setbacks seemed to have reversed investor sentiment for its investment vehicles. First, on June 29, the SEC rejected the company’s application to list GBTC as an ETF, citing that the proposal failed to demonstrate how it was “designed to prevent fraudulent and manipulative acts and practices.” Grayscale responded with a pending lawsuit against the SEC. The company’s legal officer estimated the process could take up to two years.

Second, Digital Currency Group, Grayscale’s parent company, has been hit by insolvency rumors during the crypto winter, especially after subsidiary Genesis Global halted withdrawals on Nov. 16, citing “unprecedented market turmoil” related to the collapse of troubled cryptocurrency exchange FTX .

Finally, Grayscale dropped a full on-chain disclosure, citing security vulnerabilities, in response to user demand for a Proof of Reserves audit. The company instead shared a letter from Coinbase Custody confirming the value of its holdings. All told, Grayscale currently manages $14.7 billion worth of digital currencies in its OTC funds.