According to statistics obtained from data aggregator YCharts, seven digital currency funds issued by asset manager Grayscale Investments are currently discounted from 34% to 69% to their net asset value, or NAV. Holdings tracked in the analysis include Grayscale Bitcoin Trust; Ethereum Trust, Ethereum Classic Trust, Litecoin Trust, ZCash Trust, Horizen Trust, Stellar Lumens Trust, and Livepeer Trust.
All funds track the performance of their namesake cryptocurrencies, with Grayscale Stellar Lumens Trust having the lowest discount to NAV at 34% and Grayscale Ethereum Classic Trust having the highest discount to NAV at 69%.
At the time of publication, the average discount to the NAV shared by the pool funds is 50%. This is close to the discount value of Grayscale Bitcoin Trust (GBTC), the largest holding company with $10.6 billion in digital assets under management, but only $5.59 billion in net liquidation value of shares. Meanwhile, Grayscale Ethereum Trust, which owns $3.75 billion worth of Ether (ETH), is also trading at a 50% discount.
Related: GBTC's 'elevator to hell' pushes Bitcoin spot price closer to 100% premium
Grayscale's investment vehicles have not been approved by the US Securities and Exchange Commission (SEC) as exchange-traded funds (ETFs) and therefore trade over-the-counter (OTC). Previously, his funds, such as GBTC, traded at a premium during the crypto bull market due to increased investor demand.
However, a series of setbacks appeared to have shaken investor confidence in their investment vehicles. First, the SEC rejected the company's application to list GBTC as an ETF on June 29, citing that the proposal failed to demonstrate how it was "designed to prevent fraudulent and manipulative acts and practices." grayscale responded with a lawsuit against the SEC which is ongoing. The firm's legal officer estimated that litigation could take up to two years.
Second, Grayscale's parent digital currency group has been affected by insolvency rumors in the midst of crypto winter, especially after its Genesis Global subsidiary halted withdrawals on Nov. 16, citing โunprecedented market turmoilโ related to the collapse of troubled cryptocurrency exchange FTX.
Ultimately, Grayscale stopped short of full disclosure on the network, citing security concerns, in response to users' inquiry for a Proof of Reserves audit. Instead, the firm shared a letter from Coinbase Custody certifying the value of its holdings. In total, Grayscale currently has $14.7 billion worth of digital currencies under management in its OTC funds.
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