Grayscale’s Ethereum, Litecoin, and Bitcoin Cash Trusts are at steep discounts as concerns whirl around Digital Currency Group’s liquidity.
The Grayscale Ethereum Trust (ETHE) is trading at an almost 60% discount on the value of its assets, with shares falling 93% from their all-time high in June 2019 (ATH).
There are many factors behind the ongoing decline, but in recent weeks there are growing fears that the fallout from parent company Digital Currency Group’s roughly $1.675 billion debt struggle crypto loan Genesis may have affected Grayscale from the arrow. YCharts data shows a decline of 59.39% at the time of writing, the level of confidence in the market since at least December 28. Crypto Twitter influencer “db” tweeted a video on January 4 showing a collection of all crypto trusts with stats showing their value. It showed that many Grayscale trust funds are trading at a discount, and the Ethereum Classic Trust is the hardest hit, now with a discount of 77%, Litecoin Trust with 65% followed by Bitcoin Cash Trust with 57%.
Greyscale Bitcoin Trust (GBTC) is trading at a 45% discount. Only two Grayscale Trusts are currently trading in large amounts, Filecoin Trust at 108% and Chainlink Trust at 24%.
According to the official company Grayscale, there are currently $ 3.7 billion in assets under the pool of Grayscale Ethereum Trust (ETHE) from 31 million. Ether ETH ($1,250) per share is around 0.0097 ETH, which is worth $11.77, while the market price for the share is $4.77.
Grayscale’s parent company, DCG, came under fire again this week when Cameron Winklevoss, who runs the cryptocurrency exchange Gemini, called out DCG CEO Barry Silbert in an open letter on Twitter. Winkelvoss said that DCG’s company, Genesis, owes Gemini $900 million in loans under Gemini’s Earn product that the two companies work in partnership.
The research company of digital equipment and analysis Arcane Research suggested on Jan. 3 reports that the significant debt that DCG and Genesis will have Gemini could see DCG initiate a Reg M distribution, which will allow holders of GBTC and ETHE to redeem them against assets in sub in a ratio of 1:1.
That would be bad for crypto markets but good for ETHE stocks. According to Arcane: “A Reg M will lead to a large trial plan of selling cryptocurrencies against the purchase of GrayscaleTrust products. If this condition is fulfilled, the crypto market may face another decline.
Winklevoss has spoken out against DCG’s liquidation charges, previously tweeting an update in December that global investment bank Houlihan Lokey had launched a plan on behalf of the creditors’ committee to pave the way for the recovery of assets.
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