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GBTC Discount Nears 50%, Crypto Investors Worry About Another Sell-Off

Investors and experts are concerned because the Grayscale Bitcoin Trust (GBTC) is trading at a 48.62% discount. They feel a sell-off is inevitable since DCG is also experiencing financial difficulties.

The crypto community’s worry is growing as Grayscale’s GBTC is over 50% off. On December 9, its GBTC discount or premium to NAV was 48.62%. The GBTC stock is now trading at $8.03.

Market experts and the wider crypto community are concerned that the discount may cause a selloff. One of the key reasons for its worry is that sibling business Genesis ceased withdrawals after FTX failed.

Digital Currency Group’s parent firm is likewise about $2 billion in debt, with approximately $1.7 billion owed to Genesis. Ram Ahluwalia, CEO of Lumida Wealth, thinks DCG utilized its GBTC shares as security in the Genesis loan.

DCG, according to Ahluwalia, has “adequate revenue-generating ability to withstand these obligations and losses.” He does not believe that insolvency is a plausible conclusion. However, he warned that if Bitcoin falls more, the firm may face problems.

This month, the Digital Currency Group has been in the spotlight due to the Grayscale event. Bernstein noted that DCG has many choices on the table. To salvage Grayscale, it might raise funds, dissolve the GBTC trust, or sell non-strategic assets.

Analysts Gautam Chhugani and Manas Agrawal noted that the GBRC trust structure protects holders “and remains ring-fenced against problems inside DCG or DCG group firms.” Investors are still anxious about the status of GBTC and if it will cause additional market disruption.

The Securities and Exchange Commission (SEC) of the United States has also entered the discussion over these crypto financial firms. The agency has urged crypto businesses to provide investors with information on the crypto winter and the bankruptcy of certain enterprises. It gave guidelines on the subject.

In general, it wanted these corporations to provide information about their substantial exposure to financially troubled enterprises in the market. It’s a significant move for the SEC, which has been keeping a tight eye on the cryptocurrency industry since the beginning of 2022.

Meanwhile, the SEC is looking into FTX, which is at the core of the market’s numerous financial problems. However, one pro-crypto legislator blamed the exchange’s demise on SEC Chair Gary Gensler.

Crypto products and NFTs are unregulated and can be highly risky. There may be no regulatory recourse for any loss from such transactions. Crypto is not a legal tender and is subject to market risks. Readers are advised to seek expert advice and read offer document(s) along with related important literature on the subject carefully before making any kind of investment whatsoever. Crypto market predictions are speculative and any investment made shall be at the sole cost and risk of the readers.