BTC at $9000 and ETH at $660 on Grayscale: How and Why?

  • Grayscale Investments LLC and Genesis come under the umbrella of DCG.
  • Genesis halted withdrawals due to its exposure to FTX collapse.
  • Is the conglomerate another Contagion victim?

In the global market, BTC is trading at $16,707.77, with a 0.54% rise since last week. But its price on Grayscale has dropped to $9000. While Ethereum in the open market is at $1,217.98, here, it is at $660. These prices make 2022 the worst year for the company since its launch in 2013. 

How does the price of two of the most valued coins in the crypto world have such drastically opposite prices on two platforms?

Grayscale Investment LLC is a subsidiary of a crypto conglomerate DCG (Digital Currency Group). They formed the company in order to provide BTC and ETH stocks to customers at a discounted price. They are believed to be holding 633,000 BTC and a disclosed amount of ETH and other assets, but in lack of Proof-of-Reserve compliance, DCG wants users to trust that they have the promised asset. 

Primarily what they do is they have a Grayscale Bitcoin Trust and Grayscale Ethereum Trust, through which they provide stocks to buyers at a discounted price. It is not considered a good investment meant because the stock price varies largely from the actual value of the coin. The $10.6 billion worth of Grayscale BTC (GBTC) Trust saw a heavy discount of 43% on Thursday. And Grayscale Ethereum Trust (ETHE) is 54% below the market rate of $1217.98.

The Reasons for the Price drop.

Genesis Capitals halted the withdrawals in the wake of the FTX collapse as they had $170 million in exposure to the bankrupt crypto company. Initially, it was believed that its exposure would be taken care of by the Founder and CEO of DCG, Barry Silber, as he is worth $2 billion. But Grayscale Investments & Genesis comes under the umbrella of DCG. And the conglomerate is stretching every dollar it possibly can. Due to this, there were massive discounts on Grayscale markets.

A question arises if there is a company providing BTC and ETH stock to buyers at a discounted price, why is everyone not queuing at their portal?

The stock price and actual value of the coin largely vary, and the reason behind it is that Grayscale is not transparent enough. In a statement, they said,

“Due to security concerns we do not make such on-chain wallet information and confirmation information publicly available through cryptographic Proof-of-Reserve or other cryptographic accounting procedures.”

Now, the ownership of coins on GBTC is obligated to the actual owners of coins, the GBTC shareholders. To whom the company has provided stakes of the coin. Keeping the best interest of stakeholders, they shall act and provide ETF conversion to them. 

All these discounts are made to fund the affected Genesis Global, and the way to raise the fund seems legal. But is it beneficial in the long run for the investors? That’s debatable.

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