Digital Currency Group to buy GBTC shares
Parent company of Grayscale Investments, Digital Currency Group (DCG) today announced its plans to purchase shares of Grayscale Bitcoin Trust for up to $250 million worth of shares of GBTC.
DCG intends to use cash to fund the purchases and has decided to make the purchases on the open market, which will be in compliance with rules under the Securities Exchange Act. However, the reason behind the purchase of GBTC shares from its subsidiary remains unclear at press time.
According to the announcement:
The share purchase authorization does not obligate DCG to acquire any specific number of shares in any period, and maybe expanded extended, modified, or discontinued at any time.
The development comes amid Grayscale Investment’s decision to hire several experts in the exchange-traded fund (ETF) ecosystem. This perhaps indicates a plan to further diversify the firm.
Recently, strategist Mike McGlone said that Grayscale’s GBTC discount “could signal march” Bitcoin to “$100,000″ The record discount allowed investors to get Bitcoin exposure at 13% below market value.
Grayscale #Bitcoin Trust Discount May Signal March to $100,000 – Bitcoin's end of February price disparities on U.S. regulated exchanges portend a firming price foundation, if history is a guide, and are evidence of just how nascent the crypto is. pic.twitter.com/qj6hfTvH8K
— Mike McGlone (@mikemcglone11) March 4, 2021
Meanwhile, a Bitcoin-focused ETF received its regulatory nod to launch on the Toronto Stock Exchange, which could add to Grayscale’s problems. The Fund aims to offer investors “a convenient way” to gain exposure to Bitcoin through an institutional-quality fund platform,” a value proposition that could attract investors who could be looking for better ways to protect themselves against BTC’s volatility. Further, this ETF invests directly in the asset with its holdings priced using “the Bloomberg Galaxy Bitcoin Index.”
However, to date, no single ETF has received the green light from regulators in the United States, which has not stopped the firm from applying for approval. On that note, Nik Bhatia, author of Layered Money made an interesting comment recently:
A United States #Bitcoin ETF will unleash a wave a of retail buying that will bend minds. The trade flow will obliterate available stock (supply). The harsh truth about 21 million is that there just ain’t a lotta BTC for sale. ??
— Nik Bhatia (@timevalueofbtc) March 6, 2021