According to statistics obtained from data aggregator YCharts, seven cryptocurrency funds issued by asset manager Grayscale Investments are currently discounted from 34% to 69% of their net asset value, or NAV. Holds tracked in the analysis include 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 the cryptocurrency of the same name, with Grayscale Stellar Lumens Trust having the lowest discount on NAV at 34% and Grayscale Ethereum Classic Trust having the highest discount on NAV at 69%.
At the time of publication, the average discount to the combined NAV among the funds in the group is 50%. This is close to the discount value of the Grayscale Bitcoin Trust (GBTC), the largest holding with $10.6 billion in digital assets under management but only $5.59 billion in net equity liquidation value. Meanwhile, Grayscale Ethereum Trust, which owns $3.75 billion in Ether
Also trading at 50% off.
Related: GBTC Elevator To Hell Sees Bitcoin Spot Near 100% Premium
Grayscale’s investment vehicles have not been approved by the US Securities and Exchange Commission (SEC) as exchange-traded funds (ETF), and are therefore over-the-counter (OTC). Previously, its funds such as GBTC traded at a premium during the cryptocurrency bull market due to increased investor demand.
However, a series of setbacks appears to have upset investor sentiment about its investment vehicles. First, the SEC denied the company’s request to list GBTC as an ETF on June 29, stating that the proposal failed to show how it was “designed to prevent fraudulent and manipulative business and practices.” Grayscale responded with an ongoing lawsuit against the SEC. The company’s legal officer estimated that litigation could take up to two years.
Secondly, Grayscale’s parent Digital Currency Group has been hit with bankruptcy rumors amid the crypto winter, especially after its subsidiary Genesis Global paused withdrawals on November 16, citing “unprecedented market turbulence” related to the collapse of cryptocurrency exchange FTX.
Finally, Grayscale stopped full on-chain disclosure, citing security concerns, in response to users’ inquiry about the Proof of Reserves audit. Instead, the company shared a letter from Coinbase Custody attesting to the value of its holdings. In all, Grayscale currently has $14.7 billion in cryptocurrency under management in its OTC funds.