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The GBTC rebate hits a record 45.2%, leaving some wondering if Grayscale might be the next black swan.

The GBTC rebate hits a record 45.2%, leaving some wondering if Grayscale might be the next black swan.

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(Kitco News) – Cryptocurrency winters are characterized by an extended period of widespread market weakness, which eventually leads to many projects failing for one reason or another, such as a lack of funds to sustain their survival. Every winter the reasons are different, but the result is the same – capitulation and a call for the death of Bitcoin (BTC).

The newest contagion risk emerging from the FTX debacle that threatens to plunge the cryptocurrency market even deeper into depression is the uncertainty surrounding Grayscale and its flagship crypto product, the Grayscale Bitcoin Trust (GBTC).

GBTC has come under increased scrutiny as its discount rate continues to reach new record lows, with the most recent Coinglass data showing a 45.2% discount.

Premium BTC from Grayscale Investments. Source: Coinglass

The situation became even more suspicious after Grayscale’s refusal to provide information about the addresses of its bitcoin assets, as there were growing calls for transparency in the industry in the wake of the shady FTX deals.

One of the biggest players in the industry, the Digital Currency Group (DCG), is further adding to the fear as there are concerns about whether it can survive in the future. DCG owns both Grayscale and crypto lender Genesis Trading, and the struggles facing two of its biggest moneymakers are rightfully worrying.

Crypto powerhouse executives have repeatedly tried to reassure the community that things are not as dire as they seem, but a history of similar comments from the likes of FTX owner Sam Bankman-Freed and Terra/Luna founder Do Kwon has taken crypto investors far. more suspect such claims.

Grayscale’s refusal to provide information about its address has only added to the anxiety felt by the crypto community, prompting many to say that Grayscale’s fall will be the next major black swan event.

GBTC hitting its lowest discount ever fuels concerns further, prompting Grayscale to release a statement confirming that its assets are currently under Coinbase Custody protection and stating the amount of each asset held.

The firm noted that while their decision not to disclose the specific wallets holding their bitcoins “would be a disappointment to some,” it suggested that investor panic is not a reason to “bypass the complex security measures that have protected our investors’ assets for years.” ”

All Grayscale digital asset products are created as separate legal entities to protect them from issues arising from any one product, and they are built in a way that “prohibits the digital assets underlying the products from being loaned, borrowed, or otherwise burdened.”

Some are now speculating that Grayscale could be bought out if Genesis Trading fails, but this remains in the realm of speculation for now. Grayscale has repeatedly signaled its final intention to convert GBTC to an exchange-traded fund (ETF) but has so far failed to do so as the Securities and Exchange Commission (SEC) has rejected all spot bitcoin ETFs to date.

This fact has prompted some to place the blame for some of the biggest developments in crypto in 2022 on the SEC, which has so far been slow to provide a clear regulatory framework while stifling all efforts to create more legitimate digital assets. products.

For now, the widespread fear engulfing the crypto community is largely speculation and it will take some time for things to settle down. Meanwhile, Bitcoin is clinging to support at $16,000 and Ether is struggling to hold $1,100 as the bulls try to prevent further declines.


Denial of responsibility: The views expressed in this article are those of the author and may not be those of the author. Kitco Metals Inc. The author has made every effort to ensure the accuracy of the information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is for informational purposes only. This is not a call for the exchange of goods, securities or other financial instruments. Kitco Metals Inc. and the author of this article are not liable for any loss and/or damage resulting from the use of this publication.

Written by khirou

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