Bitcoin’s Spiral Drives Grayscale’s AUM with NAV to Record Discount

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Bitcoin has been on a downward spiral since the start of the year, but is now registering strong corrections. The coin has already lost more than 17% of its value over the past week, trading at around $35,500 at press time.

But, it should also be noted that Bitcoin has lost 50% of its value from its all-time high in November last year. This seems to affect some large funds offered by Grayscale Investments.

In fact, commentator Peter Schiff noted in a tweet,

“The discount on NAV is a whopping 27%. Time to drop $GBTC.

Meanwhile, Grayscale’s largest and oldest fund, Grayscale Bitcoin Trust (GBTC), which held $25.3 billion in assets, is now trading at a record 30% discount according to Coinglass. This, despite a return of nearly 26,000% since its inception.

The world’s largest bitcoin fund, the $27.1 billion @Grayscale #Bitcoin Trust ($GBTC), fell to a record discount to its net asset value (NAV) this week. At one point, the shares traded 28% below the underlying value of bitcoin held within the trust. pic.twitter.com/EPnRGQGEzb

— Bitcoin (@Bitcoin) January 22, 2022

That said, Grayscale’s total assets under management (AUM) were $35.4 billion on January 21 – a major one-day drop from an AUM of $38.7 billion reported on January 20. January.

Here it is also worth pointing out that at the end of December, Grayscale Investments held $43.6 billion in AUM across its various crypto offerings. From there, the fund lost almost 60% of its assets under management compared to its November assets under management figure of $60.9 billion.

A while back, Grayscale CEO Michael Sonnenshein took to Twitter to say:

“Buy the crisis. sell the pump.

Basically suggesting that it might be a good time for accumulation.

That said, the fund manager’s second-largest fund, Grayscale Ethereum Trust, reported an AUM of $8.9 billion. The fund invested solely and passively in Ethereum has returned almost 260% since its inception. But, as of December 31, ETHE had $11.6 billion in assets under management. It has recorded a 23% drop since the end of last year.

However, amid the prolonged market weakness, Grayscale recently added a new fund called Bloomberg Grayscale Future of Finance Index. The fund’s Future of Finance basket represents companies in the digital economy with categories involving financial foundations, digital asset infrastructure and technology solutions.

It should also be noted that the Institutional Interest Report from ResearchAndMarkets.com previously stated that GBTC and ETHE are popular cryptocurrency funds through which investors gain exposure to BTC and Ether, adding,

“[It] is an important measure of institutional interest and trust in Bitcoin and other cryptocurrencies.

Therefore, it would not be wrong to infer that institutional trust also seems weak at this stage. Data from Coinshares’ Digital Asset Fund Flows Weekly also depicted outflows over the past five consecutive weeks.

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