Rescuing the Discount? Grayscale's Parent Company Invests $250 Million in GBTC, Job Listings Leak Group's Next Move: Bitcoin ETF
Grayscale, the parent company of GBTC and a major cryptocurrency conglomerate DCG, has made a new move by planning to allocate its cash reserves into the Bitcoin fund GBTC, up to a maximum of $250 million. Additionally, recruitment documents released by Grayscale yesterday also revealed the company's strong motivation to get involved in a Bitcoin ETF.
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Grayscale Investments
Digital Currency Group (DCG) is the parent company of Grayscale Investments, a well-known media outlet CoinDesk is also under its umbrella. Grayscale Investments has been profitable thanks to the fees generated by products like GBTC. The parent company plans to personally purchase Grayscale products.
According to a press release, DCG plans to use cash reserves as the entry funds and, in accordance with securities laws, the group's management will make purchases on the open market. DCG stated:
DCG is not obligated to purchase a specific amount of GBTC at any particular time and may increase, modify, or discontinue purchases at any time. The timing and total amount of the purchases will depend on various factors, including cash reserves, prices, and prevailing market conditions.
Rescuing the Discount?
It was reported at the end of February that Grayscale's GBTC experienced a discount rate turning negative for the first time in five years.
Note: When news mentions "Grayscale acquiring Bitcoin," it actually means Grayscale is buying on behalf of its clients. GBTC is a closed-end trust fund that only accredited large institutions can purchase from Grayscale. Other investors can only buy these shares on the OTC market after these large institutions unlock them (shares must be locked up for at least 6 months after purchase).
As shown in the above data, the GBTC discount has risen from -11.59% on 3/4 to the current -3.22%. In reality, based on Grayscale's latest holdings value in the figure below, GBTC has a value of up to $36.3 billion, with only a maximum of $250 million being invested, so the upward effect is limited. The more likely scenario is that this positive news will boost market sentiment.
Next Stop: Bitcoin ETF?
According to the latest job postings released by Grayscale, the company is actively working towards the first Bitcoin ETF in the United States. There are nine job openings in the ETF field alone, including positions like ETF Compliance Officer, ETF Product Development Specialist, and ETF Sales Director.
Thinking about a career in #crypto?! We're hiring!https://t.co/j9VVt7x5FZ
— Grayscale (@Grayscale) March 9, 2021
As early as 2013, the founders of Gemini Exchange, the Winklevoss brothers, applied to the SEC for a Bitcoin ETF. Since then, well-known investment institutions like VanECK and Bitwise have attempted but failed to launch Bitcoin ETFs. The community has also taken note of the ETF-related job postings released by Grayscale and is optimistic about it.