Grayscale Says It May Return 20% Of Investor Capital, Bitcoin Refuses To Budge

Jake Simmons

1 year ago

3 mins read

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Besides the macroeconomic headwinds, when it comes to crypto, there are two main concerns at the moment: Binance and DCG. The situation surrounding Genesis Trading, Digital Currency Group (DCG) and Grayscale, which is still unresolved after a month, is depressing the market sentiment around Bitcoin.

As reported by the Wall Street Journal, information has now leaked out again which might be a double-edged sword for investors. Grayscale CEO Michael Sonnenshein said the company would explore new options to return a portion of the Grayscale Bitcoin Trust’s capital to shareholders, as the GBTC currently trades at a record 49% discount to net asset value (NAV).

That option is up for debate if the company fails to convert the Grayscale Bitcoin Trust (GBTC) into an exchange-traded fund, according to a letter to investors.

As reported by WSJ, the option could include a tender offer for up to 20% of the trust’s $10.7 billion outstanding shares. A tender offer would be a direct appeal to shareholders to sell their shares at a specified price within a specified time period.

The U.S. Securities and Exchange Commission has repeatedly rejected Grayscale’s applications to convert GBTC into a spot ETF, which is why Sonnenshein may now be considering the move. In June, Grayscale sued the SEC just hours after its ETF application was rejected. Last week, the SEC responded to the lawsuit for the first time, reiterating its position in a filing.

Grayscale accuses the SEC of double standards by allowing futures ETFs on the market and repeatedly rejecting proposals for ETFs that invest in spot Bitcoin. The SEC’s rationale is that futures ETFs are closely monitored by the Chicago Mercantile Exchange. In contrast, spot Bitcoin ETFs lack this level of government oversight, the plea states.

What a partial sell-off of GBTC would mean for the market remains to be seen due to a lack of detailed information on the framework. But the breakup of GBTC, which holds more than 643,000 BTC, is among investors’ biggest concerns.

Meanwhile, Sonnenshein emphasized:

Grayscale products, including GBTC, remain safe, secure, and unencumbered. We remain steadfast in our belief that the conversion of GBTC to an ETF is in the best interest of investors, and we remain 100% committed to that endeavor.

Bitcoin Price Sits Above $16,700

Despite the news, the Bitcoin price held steady above $16,700 at press time. As recently as Friday, the broader crypto market experienced a sell-off after rumors surfaced that DCG might sell assets such as NEAR, Filecoin, and Ethereum Classic on a larger scale.

However, apart from falling prices, there was no evidence to back this up. Nevertheless, there were some crypto Twitter analysts speculating about a sell-off by Grayscale’s parent company.

Several crypto coins related to Barry Silbert's DCG have been selling off aggressively this evening (FIL, ZEN, ETC, NEAR), leaving many speculators to wonder whether the selling is derived from DCG itself. pic.twitter.com/M9mkQrEI7q

— Will (@WClementeIII) December 16, 2022

At press, the Bitcoin price was sitting at $16,720. Thus, BTC is at a critical level. Bitcoin needs to break through $16,900 and start a continuation to above $17,300. If there is no breakout, then the $16,200 and $15,500 regions should provide support.

Bitcoin BTC USD 2022-12-19 — Bitcoin price, 4-hour chart. Source: TradingView

Jake Simmons

Jake Simmons, a dedicated crypto journalist, has been passionate about Bitcoin since 2016 when he first learned about it. Through his extensive work with NewsBTC.com and Bitcoinist.com, Jake has become a trusted voice in the crypto community, guiding newcomers and seasoned enthusiasts alike towards a deeper understanding of this dynamic field.

His mission is simple yet profound: to demystify Bitcoin and cryptocurrencies and make them accessible to everyone.
With a professional career in the Bitcoin and crypto scene that began right after graduating with a degree in Information Systems in 2017, Jake has immersed himself in the industry. Jake joined the NewsBTC Group in late 2022. His educational background provides him with the technical prowess and analytical skills necessary to dissect complex topics and present them in an understandable format. Whether you are a casual reader curious about Bitcoin or an investor seeking to navigate the latest market trends, Jake’s insights offer valuable perspectives that bridge the gap between complex technology and everyday usage.

Jake is not just a reporter on technological trends; he is a firm believer in the transformative potential of Bitcoin over traditional fiat currencies. To him, the current financial system is on the brink of chaos, propelled by unchecked government actions and flawed Keynesian economic policies. Drawing from the principles of the Austrian school of economics, Jake views Bitcoin not merely as a digital asset but as a crucial step towards rectifying a failing monetary system. His libertarian views reinforce his stance that just as the church was separated from the state, so too should money be freed from governmental control.

For Jake, Bitcoin represents more than just an investment; it's a peaceful revolution. He envisions a future where Bitcoin fosters a sustainable and responsible financial framework for generations to come. His advocacy is not about opposition but about evolution, about laying the groundwork for a system that prioritizes transparency and equity over secrecy and inequality.

As a journalist, Jake’s articles are crafted with the precision of a scholar and the passion of a true believer. He provides not only news but also thoughtful analysis that connects the dots between daily developments and larger economic theories. His work is a beacon for those lost in the technical jargon often associated with crypto discussions, illuminating the practical implications and benefits of these technologies.

In summary, Jake Simmons is not just reporting on a revolution; he wants to be part of it, fully committed to enhancing public understanding and adoption of Bitcoin and cryptocurrencies. His work is more than just a collection of articles; it’s a resource, a guide, and a companion for anyone ready to explore the potential of this digital frontier. Whether you are taking your first steps into crypto or are a veteran looking to stay on top of the latest trends, Jake’s insights provide clarity and foresight in an often unpredictable industry. Join him on this journey to reshape the world of finance, one post at a time.

You can engage with his latest takes on Twitter: @realJakeSimmons.

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