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Under the ticker GBTC, Grayscale Bitcoin Trust is a publicly traded company that manages almost $11 billion in assets, exclusively in bitcoin.
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It offers exposure to cryptocurrencies without the hassle of direct ownership to anyone with a brokerage account.
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According to regulatory records, GBTC had around 635,000 bitcoin at the end of September, which is more than 3% of the total circulating supply.
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It once fetched a premium because of its simplicity for individual investors, in contrast to today's share price discount of 40% or more to the dollar price of the trust's bitcoin per share.
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A type of arbitrage, sophisticated traders also appreciated it when they would buy newly generated shares and then sell them for a premium.
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That contributed to the fund's size expansion, but in early 2021, the shares fell to a discount. Unfortunately for the existing owners, the procedure is not currently reversible.
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Digital Currency Group owns Grayscale Investments LLC, the sponsor of GBTC. In order to help reduce the discount, DCG had previously been granted permission to purchase GBTC shares.
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According to records, close to 10% of the shares of GBTC were owned by DCG and its subsidiaries as of the end of September.
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To recuperate the discount, some GBTC owners would support the trust's dissolution and distribution of the underlying assets.
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But it is very difficult to view that as a possible or likely consequence. GBTC is a lucrative company with captive clients that assesses annual fees equal to 2% of the fund's assets.
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