By James Davis
The Grayscale’s Bitcoin Trust stared at several challenges last year. By the end of September 2022, the fund’s discount to net asset value had risen by 35% and even widened further by 45% as of December 31, 2022.
The data above means that today, the value of this Bitcoin fund is lower than the current Bitcoin spot prices. A Tennesse-based asset manager Valkyrie Investments is seeking to turn the situation around by taking over sponsorship and starting a new fund.
In a statement, Valkyrie cited that it acknowledged the vital role that Grayscale has played in the development of the Bitcoin ecosystem and has nothing but respect for the entire Grayscale team.
However, Valkyrie added it was time for a change considering the recent events involving Grayscale and its associated companies. The asset manager believes it is the best firm to manage Grayscale Bitcoin Trust and ensure fair treatment to each investor.
Valkyrie Looks to Launch an Opportunistic Fund
On Friday last week, Valkyrie announced plans to launch its Opportunistic Fund that will seek to take advantage of Grayscale’s discount to the net asset value. In addition, Valkyrie revealed that it would add to its Grayscale Bitcoin Trust holdings, which could show its investors the actual value of the underlying BTC.
Following the Valkyrie sponsorship announcement, an exchange-traded fund analyst, Eric Balchunas, shared his views. According to him, Valkyrie seeks to become the new sponsor of Grayscale Bitcoin Trust to facilitate redemptions at net asset value and for a fee of 74 basis points.
Grayscale’s Parent Firm Faces Several Financial Challenges
Valkyrie’s plans for Grayscale come at a time when Digital Currency Group, Grayscale’s parent company, continues to have issues with its other firm Genesis Global Capital. Two months ago, Genesis was forced to suspend withdrawals from its lending arm and new loan creations on the platform.
In addition, it is alleged that Genesis owes Gemini, a crypto exchange, over $850 million. Recently, Gemini formed a committee to recover the funds. Despite the challenges, Digital Currency Group has vowed to continue with its operations, and at the time of publishing, it has yet to respond to Valkyrie’s proposal neither did Grayscale.