The Digital Currency Group (DCG) has begun selling several investment vehicles managed by its sister company Grayscale. According to the Financial Times does it sell the assets in question at a steep discount, but are the sales necessary to keep the company out of financial woes?
What is Grayscale?
Grayscale is a sister company of DCG, which means that the latter is a majority shareholder in Grayscale. You’ve probably heard of the Grayscale Bitcoin Trust (GBTC), the largest bitcoin (BTC) fund in the world, which has over 600,000 BTC under management at the time of writing.
However, GBTC shares have been trading at a hefty discount to the market value of the bitcoin held in the fund for months now. This simply means that the company’s stock is worth less than the current market value of the bitcoin in the fund.
The market value of GBTC is currently no less than 43% below the BTC price. It is possibly a sign that the demand for bitcoin is currently not high enough among institutional investors. Concerns about DCG and the bankruptcy of Genesis probably also play a role.
Sale of ethereum
According to the Financial Times reporting, DCG’s latest sales have focused primarily on Grayscale’s ethereum (ETH) fund. The company sold a total of $22 million worth of ether as of January 24. That’s about a quarter of the shares DCG owned in Grayscale’s ethereum fund.
It is striking that DCG is selling the shares for about $ 8 each, while the price of ethereum is currently worth $ 16 per share. In that respect, the shares are an opportunity to buy ether at a hefty discount.
The only problem is that you can’t do much with these ethers, because they’re basically within the fund’s management. Only if the fund would actually pay out the ether, which is currently not possible, will it be of any use to you. Another positive scenario is if the share price creeps back towards the market value of ether.
Earlier today, Crypto Insiders reported that a new step has been taken in the case between DCG, Genesis and Bitvavo; the negotiations have now been completed.
