Digital Currency Group (DCG), the parent company of the world’s largest Bitcoin trust, Grayscale Bitcoin Trust (GBTC) has announced plans to buy a quarter million worth of shares of GBTC.
DCG will purchase the shares on the open market through its cash on hand fund over an unspecified period of time that will also determine how many shares the company will end up acquiring.
- “The actual timing, amount and value of share purchases will depend entirely upon a number of factors, including the levels of cash available, price and prevailing market conditions.”
Institutional Investors and Discounted BTC
Grayscale has become the leading one-stop digital assets shop for institutional investors as it allows them to indirectly gain exposure to bitcoin and other digital assets.
The firm charges a premium for all its digital asset products including Bitcoin, Ethereum, Bitcoin Cash, Litecoin, and Stellar, to cover the risks associated with crypto custody such as price volatility and crypto funds security.
Grayscale’s GBTC is the biggest of its trusts and owns 649,130 BTC currently valued at over $36.6 billion. It also represents 0.03% of the total 18,650,081 BTC in circulation, according to data by CoinMarketCap.
GBTC is also over-the-counter security registered with OTC Markets Group (OTCQX), a top-tier marketplace for trading over-the-counter stocks. OTC Markets requires companies to meet high financial standards, demonstrate compliance with the US SEC securities laws and follow the best practice corporate governance.
Last month, a sharp retracement in the price of Bitcoin led to a major sell-off of GBTC shares, causing the fund to trade at a discount for the first time since its inception in 2013. This means that the price of GBTC market shares in the OTC market is currently lower than the net asset value of its shares.
One GBTC share goes for $49.12, according to data on Grayscale’s official website which approximates to 0.0009659 BTC. At this price, investors are essentially purchasing 1 BTC at $51,891; more than a 7% discount from the actual price above $56,500.
According to Bitcoin mogul and Founder of Morgan Creek Digital assets management fund Anthony Pompliano, DCG is one among many of the institutional investors that are rushing to acquire bitcoin at a discounted rate.
- “Digital Currency Group just announced that they will be buying shares of GBTC in the open market. Discounted Bitcoin being gobbled.”
Meanwhile, BTC has tested $57,000 in the last 24 hours as analysts eye $70,000 as the next key major resistance level before the top coin breaches the visionary $100,000.