Fiscal year 2023 has been exceptional for Grayscale Investments, despite the ongoing bear market in the world of cryptocurrencies.
The block data shows that the financial giant's two core products, Grayscale Bitcoin Trust (GBTC) and Grayscale Ethereum Trust (GETHE), have been instrumental in maintaining profitability, generating a combined revenue of $192 million to date.
Let's take a moment to clarify what these grayscale products are.
Bitcoin Grayscale Trust (GBTC)
GBTC is a private closed-end trust that is supposed to provide investors with exposure to the price performance of bitcoins without the requirement to buy, store and custody the cryptocurrency.
As a closed-end fund, GBTC issues a fixed number of shares that cannot be redeemed from the fund. Instead, they are bought and sold in secondary markets.
GBTC has bitcoin as its underlying asset with shares passively invested in bitcoin, providing an effective avenue for investors to access this market.
The Grayscale Ethereum Trust (GETHE)
Similarly, GETHE is a closed-end fund that provides investors with exposure to the price movements of ethereal. Like GBTC, GETHE issues a finite number of shares that are traded on secondary markets and directly owns ethereum as its underlying asset.
Closed-end funds like those offered by Grayscale Investments are unusual in the way they operate and trade. Those aren't like open-ended funds, which issue and redeem shares at NAV per share directly with investors.
The price of these closed-end funds in the secondary market is determined by supply and demand factors, and not directly by the NAV of the fund. Because of this, shares in closed-end funds often end up trading at a price that is significantly different from the NAV per share of the assets the fund owns.
This leads to situations where the shares of these funds are trading at a premium or discount to the NAV. Grayscale Bitcoin Trust (GBTC) has experienced very significant premiums and discounts to the market value of bitcoin based on sentiment.
:max_bytes(150000):strip_icc()/Primary-Image-how-to-store-cryptocurrency-in-2023-7500942-d7e5d02e6aca4a009d312eedca8b0ac9.jpg?w=75&resize=75,75&ssl=1 "How to Store Cryptocurrency in 2023")
