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The Grayscale-Gensler Stalemate
Key Insights:
- Shares of the industry’s largest investment product, Grayscale’s Bitcoin Trust (GBTC) trade at a 30% discount to NAV today, creating a total capital impairment of $6 billion across all Grayscale products versus the fair value of the underlying trust assets.
- When it comes to GBTC, the Grayscale principals (like Barry Silbert) and SEC opponents (like Chair Gary Gensler) win from a stalemate, while investors lose.
- Grayscale’s application to convert the Bitcoin Trust to an ETF, which would close the GBTC share discount and allow investors to redeem funds, has been rejected.
- There is still a (narrow) path to GBTC outperformance versus spot bitcoin over the next few months thanks to a unique path to redemptions in the medium term.
Will GBTC ever convert to an ETF? Will investors ever be able to pull their bitcoin out of the Grayscale Bitcoin Trust? And is there any hope on the horizon for GBTC bagholders? Today, I'll unpack these questions by going step-by-step through the most misunderstood product in crypto.
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Prior to founding Messari, Ryan was an entrepreneur-in-residence at ConsenSys, and on the founding teams of Digital Currency Group, where he managed the firm’s seed investing activity, and CoinDesk, where he led the company’s restructuring & annual Consensus conferences. He has been an investor & prolific writer in the crypto industry since 2013.