GBTC

SOL price risks 20% drop despite Grayscale Solana Trust’s retail debut

The latest Solana rally has had it return to the resistance range that prompted 25%–40% price pullbacks multiple times this year.

On April 17, the price of Solana’s SOL (SOL) crept lower in the wake of similar price moves across the top-ranking cryptocurrencies, including Bitcoin (BTC) and Ether (ETH).

SOL’s price dropped by over 4% to go under $24.50 despite rising to $26 — a two-month high — earlier in the day.

In comparison, BTC’s and ETH’s prices dropped 3.5% and 3%, respectively, hinting at a bearish start to the week.

*SOL/USD hourly price chart. Source: TradingView*

SOL price in a technical correction

The SOL/USD selloff on April 17 started after it entered its 2023 resistance range.

Notably, the $25–$27 price area has capped SOL’s upside attempts since January 2023. Testing it as resistance has preceded 25%–40% corrections on multiple occasions this year, as illustrated below.

*SOL/USD daily price chart. Source: TradingView*

The possibility of undergoing a sharp bearish reversal in April has now increased as SOL’s price returns into the range and its daily relative strength index (RSI) hangs around the overbought threshold of 70.

In this bearish scenario, the immediate downside target appears to be around $20, about 20% lower than the current prices.

Conversely, a decisive breakout above the $25–$27 price range could have SOL price climb toward $30, which served as support in August–October 2022.

Such a breakout could extend until $35 over the next few months, a level that coincides with SOL’s 50-week exponential moving average (the red wave in the chart below).

*SOL/USD weekly price chart. Source: TradingView*

Grayscale Solana Trust goes public

On April 17, U.S.-based Grayscale Investments announced that its Grayscale Solana Trust had begun trading on OTC Markets under the symbol GSOL.

To recap, Grayscale Solana Trust is a security that derives its value from SOL’s spot price. In doing so, the trust enables investors to gain exposure in the Solana market while avoiding the challenges of buying, storing and safekeeping SOL directly.

Interestingly, SOL’s price dropped by up to 4.4% after the announcement, suggesting traders likely “sold the news” of an institutional Solana investment product going public.

One reason for the bearish debut for GSOL is the current state of Grayscale trusts on the whole. Notably, they act like closed-end funds, meaning Grayscale cannot issue new shares or remove shares from the open market to adjust to capital inflow or outflow.

As a result, the share price of the Solana trust can deviate from the net asset value. This could spook investors in a bear market when their GSOL starts trading at a discount versus the value of Grayscale’s SOL reserves, similar to the Grayscale Bitcoin Trust.

As of April 17, Grayscale Solana Trust’s holdings per share were up around 148% year-to-date, stemming from identical gains in SOL/USD.

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.

How does the U.S. Dollar Index (DXY) impact cryptocurrencies? Watch Macro Markets

Cointelegraph analyst and writer Marcel Pechman explains how the U.S. Dollar Index (DXY) impacts cryptocurrencies.

The show Macro Markets, hosted by Marcel Pechman, which airs every Friday at 12 pm ET on the Cointelegraph Markets & Research YouTube channel, explains complex concepts in layman’s terms and focuses on the cause and effect of traditional financial events on the day-to-day crypto activity.

In the show’s inaugural episode airing today, Pechman discusses the impact of the U.S. Dollar Index (DXY) on cryptocurrencies and how the inflation-protected bonds exchange-traded fund (ETF) provides a much better estimate of traditional markets’ demand for fixed income.

Viewers will learn how a strong United States dollar is not necessarily positive for the U.S., what is an inverse correlation, and why analysts believe a more robust DXY is inherently bearish for cryptocurrencies.

The analyst invites viewers to experiment with the Treasury Inflation-Protected Securities (TIPS) ETF, a government debt instrument that benefits from higher inflation — hence, a better sentiment gauge on demand for risk assets, including cryptocurrencies.

Marcel explains why the $15-billion Grayscale Bitcoin Trust (GBTC) trades on stock markets below the 630,000 Bitcoin (BTC) value held by the investment vehicle. Some analysts claim that the Bitcoin bull run will be unsustainable only until this indicator flips positive — an argument that Pechman refutes.

To close the first Macro Markets show, the analyst explains in simple terms what a hawkish U.S. Federal Reserve is, how interest rate increases impact the economy and, ultimately, crypto markets. This segment has been specially crafted for traders looking for simple and direct relations between complex macroeconomic events and their impacts on markets.

If you are looking for exclusive and valuable content provided by leading crypto analysts and experts, make sure to subscribe to the Cointelegraph Markets & Research YouTube channel. Join us at Macro Markets every Friday at 12:00 pm ET.

Osprey sues Grayscale for misrepresenting likelihood of GBTC ETF approval

Osprey alleges its only competitor on the BTC OTC trust asset market gained its 99.5% market share by misrepresenting the likelihood of its trust becoming an ETF.

Digital asset manager Osprey Funds filed suit against Grayscale Investments in Connecticut Superior Court on Jan. 30, alleging violations of the state’s Unfair Trade Practices Act. The suit concerns Grayscale advertising and promotion of the Bitcoin (BTC) exchange-traded fund (ETF) it is seeking to create.

Osprey stated in the suit that it is the only competitor to Grayscale on the over-the-counter traded Bitcoin trust asset management market, and thatGrayscale maintained its leading position through deceit:

“Only because of its false and misleading advertising and promotion has Grayscale been able to maintain to date approximately 99.5% market share in a two-participant market despite charging more than four times the asset management fee that Osprey charges for its services.”

Specifically, Osprey alleged that Grayscale promoted participation in its Grayscale Bitcoin Trust (GBTC) as a means of accessing a spot-based Bitcoin ETF through the conversion of its $12-billion GBTC. Grayscale presented the conversion as “a foregone conclusion, when it knew that access was never likely to happen,” according to the suit.

Osprey alleged that Grayscale continued to call the conversion “‘likely,’ despite knowing that such a description was false, as the SEC had consistently rejected the possibility of such conversion for a Bitcoin commodity fund since in or before late 2020.” Osprey claimed that statements in emails, press releases and on Twitter, as well as Grayscale executives’ television appearances, contained the false information.

Dear @BarrySilbert, I have an idea for $GBTC. Give me a buzz when you’re ready. We’re just up the road from you in Connecticut. pic.twitter.com/zVFHBLxSl0

— Greg King, CFA (@GregKingOsprey) January 13, 2023

The United States Securities and Exchange Commission officially denied Grayscale’s application to convert its GBTC into an ETF on June 29. Grayscale filed a petition for review in the District of Columbia Court of Appeals thatsame day. The court is expected to hear oral arguments in the case on March 7.

Grayscale is part of Digital Currency Group, which also owns Genesis Global Capital, the crypto lender that declared bankruptcy on Jan. 19. Osprey has also seen hard times recently. It has reportedly laid off 15 staff members since last summer, leaving it with a staff of less than 10. Osprey is seeking an award for damages from Grayscale and injunctive relief.

Grayscale did not immediately return an email seeking comment.

Updated Jan. 31 at 2.19am UTC to note that Cointelegraph has reached out to Grayscale.

Cathie Wood: Ark dumps 500K GBTC shares, adds Coinbase stock as Bitcoin recovers 40%

Ark’s GBTC weight in the portfolio actually increased despite the fund selling 500,000 shares in the past month.

Cathie Wood’s Ark Invest offloaded a chunk of its Grayscale Bitcoin Trust (GBTC) shares since November’s Bitcoin (BTC) price lows, the latest data shows.

Cathie Wood’s Ark short-term cautious on GBTC

Ark Invest added 450,272 GBTC shares worth $4.5 million to its ARK Next Generation Internet ETF (ARKW) in November 2022. At the time, GBTC was trading in the $7.46-$9.48 range versus $12.25 in January 2023.

GBTC price, of course, recovered alongside Bitcoin, rising roughly 40% from its November lows. The recovery in January also helped reduce the GBTC “discount” from nearly 50% to 40%, according to YCharts.

*GBTC daily price chart. Source: TradingView*

Interestingly, the share price rebound coincided with a reduction in ARKW’s GBTC holdings by 500,000 shares, suggesting profit taking in the short term.

*GBTC shares (purple) in Ark’s ETF versus its price (orange). Source: Cathiesark.com*

Moreover, Ark’s reduction in shares since November appears in line with its officially “bearish view” on the Grayscale Bitcoin Trust, as mentioned in its December report, which stated that:

“The Digital Currency Group (DCG) appears to be one of the biggest questions marks in the crypto industry at this time.”

The company also expressed concerns about Genesis Global, a cryptocurrency lender owned by DCG. Genesis filed for bankruptcy while claiming $1 billion to $10 billion in liabilities to over 100,000 creditors.

Meanwhile, Grayscale has been unable to convert its Bitcoin trust into an ETF following rejections from the U.S. Securities and Exchange Commission (SEC). As Cointelegraph reported, an approval from the SEC could reset GBTC’s discount to zero.

Nonetheless, as of Jan. 23, GBTC’s share weight in Ark’s portfolio has actually increased to 0.52% compared to its November 2022 low of 0.35%.

*GBTC shares’ weight (purple) across Ark ETFs. Source: Cathiesark.com*

Ark adds $17.6M in Coinbase stock

Ark’s selling of GBTC shares in the past weeks coincided with accumulation of Coinbase (COIN) shares.

Cathie Wood’s ARKW added 320,000 COIN shares (about $17.6 million) in 2023. As a result, the Coinbase stock’s weight in Ark Invest’s combined ETF portfolios has reached nearly 3.62% on Jan. 23 versus 2.73% at the start of this year.

*COIN shares (purple) in Ark’s ETF versus its price (orange). Source: Cathiesark.com*

Overall, Ark appears to be only increasing its exposure to the Bitcoin market, particularly as Wood is well known for her consistent $1 million BTC price prediction by 2030.

Can the GBTC price rally continue?

Similarly, Greenery Financial, an investment strategy firm, confirmed that it had shifted its GBTC exposure to ProShares Bitcoin Strategy ETF (BITO) due to the above-mentioned risks around DCG.

“Any bad news, be it Cathie Wood selling out of GBTC or DCG going bankrupt, will spark the same fears and doubt – of uncertainty – and likely cause an expansion of the discount once again,” the firm warned in its SeekingAlpha note, saying:

“With Bitcoin having no real catalyst in the short term and plenty of potential downside catalysts, there are plenty of risks here from the NAV side as well.”

Nonetheless Bitcoin and GBTC prices may keep on rallying through Q1 from a technical perspective.

On the daily chart, GBTC has reclaimed its 50-day exponential moving average (50-day EMA; the red wave in the chart below) near $9.68 as support.

Upward momentum could see it test the 200-day EMA (the blue wave) near $15 if it continues to float above the 50-day EMA wave, similar to what happened in March-April 2022.

The technical upside target falls in line with what Pat Tschosik, senior portfolio strategist at Ned Davis Research, predicts about the Grayscale Bitcoin Trust.

He argues that GBTC price could not only double by mid-2023, but also narrow the extant discount gap with Bitcoin’s spot price.

“We recommend GBTC…as a way to play Bitcoin because it has a ‘potential NAV kicker rebate,’ which not only means it would go up if Bitcoin goes up, but also closing its current large 35% rebate on NAV,” Ned Davis Research said in a note to clients.

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.

Grayscale files brief in ETF suit against SEC, oral arguments may come within months

Grayscale appealed the SEC’s denial of its application to create a spot BTC ETF in June; the case “is moving swiftly,” according to the Grayscale chief legal officer.

Grayscale filed a reply brief in its appeal of the United States Securities and Exchange Commission (SEC) denial of its application to convert its $12-billion Grayscale Bitcoin Trust (GBTC) into a spot-based Bitcoin (BTC) exchange-traded fund (ETF). The brief, filed in the District of Columbia Circuit Court, addressed points made in the SEC reply brief filed in December and restated its own arguments.

The SEC based its decision on findings that Grayscale’s proposal did not sufficiently protect against fraud and manipulation. The agency had made similar findings in a number of earlier applications to create spot-based BTC ETFs.

1/ As part of our suit challenging the SEC’s decision to deny $GBTC conversion to a spot #bitcoin #ETF, @Grayscale just filed our Reply Brief with the DC Circuit Court of Appeals. Here’s what you need to know:

— Craig Salm (@CraigSalm) January 13, 2023

Grayscale countered the denial with claims in court that the SEC had acted arbitrarily in treating spot traded exchange-traded products differently from futures traded products. “There is a 99.9% correlation between prices in the bitcoin futures market and the spot bitcoin market,” Grayscale stated in its brief. It also claimed the SEC had exceeded its authority:

“The Commission is not permitted to decide for investors whether certain investments have merit – yet the Commission has done just that, to the detriment of the investors and potential investors it is charged to protect.”

Grayscale chief legal officer Craig Salm said in a tweet, “The case is moving swiftly. While timing is uncertain, oral arguments may be as soon as Q2 [2023].” Grayscale applied to the SEC in October 2021, and the agency denied that application on June 29.

Fir Tree Capital Management sued Grayscale on Dec. 6 demanding, among other things, that Grayscale give up its appeal of the SEC decision. “That strategy will likely cost years of litigation, millions of dollars in legal fees, countless hours of lost management time, and goodwill with regulators,” the complaint read.

Grayscale is owned by the Digital Currency Group, which is currently undergoing a financial squeeze.

Bitcoin price holds $17K into Fed Powell speech as GBTC jumps to multi-month highs

Bitcoin, crypto and risk asset traders await dovish signals from Fed Chair Jerome Powell ahead of fresh CPI data later in the week.

Bitcoin (BTC) stayed above $17,000 on Jan. 10 as risk assets awaited fresh cues on policy from the United States Federal Reserve.

*BTC/USD 1-hour candle chart (Bitstamp). Source: TradingView*

Powell to kick off week of U.S. macro triggers

Data from Cointelegraph Markets Pro and TradingView showed BTC/USD consolidating after hitting $17,396 on Bitstamp the day prior — its highest since Dec. 16.

The pair gained in line with gold early in the week, seeing a slight cool-off as U.S. stocks also lay in wait for potential Fed catalysts.

Fed Chair Jerome Powell was due to speak at a central bank conference on the day, with bulls hoping for a more dovish tone in the wake of several months of declining inflation.

The latest Consumer Price Index (CPI) data covering December 2022 was not due until Jan. 12.

Commenting on short-term BTC price action, Michaël van de Poppe, founder and CEO of trading firm Eight, cautioned on becoming overly optimistic.

“Bitcoin rejecting at crucial area as Powell’s speech is approaching yesterday + simply crucial resistance zone,” he summarized in Jan. 9 tweet.

“Probably sweep towards $17.1K before another bounce towards $17.5K for bearish divergence or we long at $16.9K. Good volatility. Lots of dips on altcoins too.”

*BTC/USD annotated chart. Source: Michaël van de Poppe/ Twitter*

Full-time Bitcoin trader George, a popular presence on social media, eyed a potential intraday range with $17,000 as support.

“Think we could be establishing a new range between 17k and 17.6k for the next couple days,” part of an update confirmed.

Elsewhere, there was no sign of relief for the U.S. dollar, as strength continued to deteriorate in a potential boost for crypto. The U.S. Dollar Index (DXY) threatened to challenge 103 as support for a second day running.

*U.S. Dollar Index (DXY) 1-hour candle chart. Source: TradingView*

GBTC “discount” reverses despite investor pressure

More conspicuous than the modest uptick in BTC spot price was that of the largest Bitcoin institutional investment vehicle.

Related: Why is the crypto market up today?

Beginning Jan. 6, the Grayscale Bitcoin Trust (GBTC) began a marked recovery which saw its share price add 17% over three days.

In so doing, the GBTC discount to net asset value — spot BTC — narrowed to its smallest in several months.

Formerly a premium, the negative “premium” stood at 38.5% on the day, up from record lows of 48.9% on Dec. 13, according to data from Coinglass.

Grayscale parent company, Digital Currency Group (DCG), continued to field criticism amid a concerted effort from investors to regain access to their cash.

*GBTC premium vs. asset holdings vs. BTC/USD chart. Source: Coinglass*

The views, thoughts and opinions expressed here are the authors’ alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

Grayscale ETH trust nears record 60% discount as nerves continue over DCG

Grayscale’s Ethereum, Litecoin and Bitcoin Cash Trusts are at steep discounts as concerns whirl around Digital Currency Group’s liquidity.

The Grayscale Ethereum Trust (ETHE) is trading at nearly a 60% discount to the underlying value of its assets, with shares falling 93% from its June 2019 all-time high (ATH).

There are many reasons behind the ongoing decline, but in recent weeks fears have grown that fallout from parent company Digital Currency Group’s debt of approximately $1.675 billion to troubled crypto lender Genesis could impact Grayscale assets.

YCharts data shows a 59.39% discount at the time of writing, a level the trust has traded at since at least Dec. 28.

*A one-year chart for the Grayscale Ethereum Trust’s discount. Image: YCharts*

Crypto Twitter influencer “db” tweeted an image on Jan. 4 depicting the entire collection of Grayscale crypto-based trusts with statistics showing their respective premium.

Every Grayscale trust and their respective premium % pic.twitter.com/TYQf5FmeXt

— db (@tier10k) January 3, 2023

It showed most of Grayscale’s trust funds are trading at a discount with Ethereum Classic Trust hit hardest, currently at a 77% discount, followed by Litecoin Trust at 65% and Bitcoin Cash Trust at 57%.

The Grayscale Bitcoin Trust (GBTC) is trading at a 45% discount.

Just two Grayscale Trusts are currently trading at a premium, the Filecoin Trust at 108% and the Chainlink Trust at 24%.

According to Grayscale’s official website, there are currently $3.7 billion worth of assets under the Grayscale Ethereum Trust (ETHE) pool collected from 31 million shares.

The Ether (ETH) per share is around 0.0097 ETH, which is worth $11.77 USD, while the market price per share is $4.77 USD.

Grayscale’s parent company, DCG, came under fire again this week when Cameron Winklevoss, the co-founder of cryptocurrency exchange Gemini, called out DCG CEO Barry Silbert in an open letter on Twitter.

Winkelvoss claimed DCG’s company Genesis owes Gemini $900 million in funds lent to it as part of Gemini’s Earn product that the two companies ran in partnership.

Digital assets research and analysis company Arcane Research suggested in a Jan. 3 report that the significant debt DCG and Genesis purportedly owe to Gemini could see DCG initiate a Reg M distribution, which would allow holders of GBTC and ETHE positions to redeem them for the underlying assets at a 1:1 ratio.

This would be bad for crypto markets but good for ETHE shares. According to Arcane: “A Reg M would cause a massive arbitrage strategy of selling crypto spot versus buying GrayscaleTrust shares. If this scenario plays out, crypto markets could face further downside.”

Winklevoss has been vocal on the alleged DCG liquidity issues, previously tweeting an update in December that global investment bank Houlihan Lokey had presented a plan on behalf of the Creditor Committee to provide a pathway for the recovery of assets.

BTC price faces 20% drop in weeks if Bitcoin avoids key level — Analyst

Bitcoin does not look good when it comes to sustained BTC price upside, traders warn, as GBTC reaches a fresh record discount.

Bitcoin (BTC) stayed rigid below $17,000 at the Dec. 19 Wall Street open as skeptical traders feared more downside.

BTC traders call time on upside potential

Data from Cointelegraph Markets Pro and TradingView showed BTC/USD lingering around the $16,700 mark, practically unmoved over the weekend.

The pair saw only fractional volatility at the open, as United States equities fell slightly. At the time of writing, the S&P 500 and Nasdaq Composite Index were down 0.5% and 1%, respectively.

For Bitcoin traders, there was little to celebrate, with consensus forming around the potential for testing lower levels next.

“Bearish as long as it stays below the $19k,” Crypto Poseidon summarized alongside a chart.

*BTC/USD annotated chart. Source: Crypto Poseidon/Twitter*

Popular trader and analyst Rekt Capital highlighted $17,150 as an important level to reclaim to avoid further downside later on.

“If BTC continues to reject from the ~$17150 resistance… Then price could drop up to -20% to the downside in the coming weeks,” he predicted, uploading the one-month BTC/USD chart.

Rekt Capital added that there was “still time for BTC to perform a Monthly Close above the ~$17150 level later this month” but that “a Monthly Close below ~$17150 would confirm the beginnings of a breakdown from here.”

Michaël van de Poppe, founder and CEO of trading firm Eight, meanwhile, offered a slightly more hopeful outlook.

With more U.S. economic data expected toward the end of the week, BTC/USD had the potential to break to the upside and target $17,300 to then offer “short opportunities.”

“No breakthrough, then looking for longs around $16.2K or $15.5K,” he countered.

Grayscale CEO: FTX was a “failure of people”

News that Binance.US, the U.S. offshoot of crypto exchange Binance, had offered to acquire the assets of stricken lender Voyager, but it had no tangible impact on market performance.

The latest development in the FTX saga, the announcement came as Binance itself continued to deal with what its CEO, Changpeng Zhao, again called “FUD” over the weekend.

In a letter to investors, meanwhile, Michael Sonnenshein, CEO of investment firm Grayscale, sought to draw a clear distinction between FTX and crypto as a whole. Grayscale’s parent company, Digital Currency Group (DCG), had previously also become caught up in the FTX aftermath.

“FTX Was a Failure of People, Not a Failure of Crypto: Too many investors were harmed. From crypto to traditional finance, mainstream media, and D.C. – it seems few were spared from deception through false narratives and false documentation,” he wrote.

“We should not, however, conflate the actions of a few individuals and organizations with Bitcoin or Ethereum, the underlying blockchain technology, or smart contracts and decentralized finance applications.”

Grayscale’s flagship product, the Grayscale Bitcoin Trust (GBTC), traded at a 48.7% discount to the Bitcoin spot price as of Dec. 17 — its steepest discount ever, according to data from Coinglass.

The views, thoughts and opinions expressed here are the authors’ alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

Grayscale CEO highlights 20% GBTC share buyback option if ETF conversion fails

The proposed offer would require both SEC relief and shareholders’ approval.

According to an end-of-year letter to investors published on Dec. 10, Grayscale Investments CEO Michael Sonnenshein said that the firm might consider “a tender offer for a portion of the outstanding shares of GBTC [Grayscale Bitcoin Trust]” if the latter’s exchange-traded fund (ETF) conversion process is ultimately unsuccessful. Sonnenshein stated that “such tender offer would be for no more than 20% of the outstanding shares of GBTC” and would require both regulatory “relief” from the United States Securities and Exchange Commission as well as shareholder approval.

Grayscale and its subsidiary over-the-counter traded fund, GBTC, are currently embroiled in a lawsuit with the SEC after the latter denied Grayscale’s application to convert the GBTC to a spot Bitcoin ETF on June 29, 2022. As told by Sonnenshein, Grayscale filed its opening brief against the SEC on Oct. 11, 2022, and is due to submit its response to an SEC reply brief by Jan. 13, 2022, with the final written brief due on Feb. 3, 2022. “Shortly thereafter, a three-judge panel will be selected to hear oral arguments and rule on the case,” Sonnenshein wrote to investors.

“In the event we are unsuccessful in pursuing options for returning a portion of the capital to shareholders, we do not currently intend to dissolve GBTC, but would instead continue to operate GBTC without an ongoing redemption program until we are successful in converting it to a spot bitcoin ETF.”

Cointelegraph previously reported that GBTC, along with other major Grayscale digital currency funds, is trading at discounts to net asset values, or NAVs, of 34%–69% due to solvency concerns arising from its parent company, Digital Currency Group, and its exposure to troubled cryptocurrency broker Genesis Global. At the time of publication, GBTC has $10.68 billion in Bitcoin (BTC) under management but is only worth $5.48 billion per market capitalization.

GBTC ‘elevator to hell’ sees Bitcoin spot price approach 100% premium

Bad times for the Grayscale Bitcoin Trust get even worse this week as its discount to BTC/USD approaches 50% for the first time.

Bitcoin (BTC) investment vehicle Grayscale Bitcoin Trust (GBTC) is trading close to 50% below the BTC price on spot markets.

Data from on-chain analytics platform Coinglass confirms that on Dec. 8, GBTC shares hit a new record low of -47.2% against BTC/USD.

GBTC troubles pile up post-FTX

In the latest bout of nerves to hit the Bitcoin industry since the fall of FTX, GBTC is nearing half-price versus the price of Bitcoin.

The largest institutional Bitcoin investment vehicle, with assets worth around $10 billion, GBTC has faced numerous challenges in recent years.

The price of its shares previously traded higher than BTC/USD, resulting in what was called the “GBTC premium.” Since 2021, however, that premium has turned negative, but the resulting “discount” has done little to lure additional institutional interest.

As Cointelegraph reported, beyond a few key exceptions such as ARK Invest, GBTC is languishing. Operator Grayscale, part of Digital Currency Group (DCG), has meanwhile been attempting to convert it to an exchange-traded fund (ETF), suing U.S. regulators standing in its way.

Amid the legal battle, FTX has sparked liquidity problems elsewhere in the DCG empire, and this has led to doubts over Grayscale and GBTC. Grayscale declining to show proof of its BTC reserves last month added to the tensions, although custodian Coinbase confirmed the assets were secure.

“Grayscale is in some real trouble if they have to reveal where all the Bitcoins are that back the GBTC,” popular commented Bitfinex’ed wrote in part of a Twitter discussion on the topic this week.

This week things became even worse, as Grayscale faced a lawsuit from investor Fir Tree over what it calls “shareholder-unfriendly actions.”

Meanwhile, overall interest in crypto ETFs has plummeted this year, separate data suggests.

Woo: Problems “partly bullish” for Bitcoin

With that, the GBTC share price ratio to its underlying Bitcoin assets, having barely recovered from previous record lows, sank even further.

Related: Why is Bitcoin price down today?

“$GBTC discount to bitcoin NAV [net asset value] is on the express elevator to hell. => sentiment = bearish,” summarized Timothy Peterson, investment manager at Cane Island Alternative Advisors.

Others lamented the slow pace of change in the U.S. as fueling the fire.

“Quite a lot of the pain this year would have been avoided if GBTC had been made into an ETF SEC keeping everyone safe!” investor and entrepreneur Alistair Milne reacted, echoing popular sentiment from recent weeks.

Willy Woo, creator of statistics resource Woobull, meanwhile argued that the impact of fading GBTC exposure was not necessarily a straight negative for BTC price strength.

“The GBTC / DCG / Genesis fears is a bearish cloud hanging over the market. But counterintuitively part of the impact has been bullish for BTC price,” he tweeted on Dec. 5.

“37.5% of people who sold GBTC bought spot BTC to take custody. Selling GBTC does not impact BTC price, buying spot does.”

An additional Twitter survey quizzed the platform’s users who notionally own GBTC over their motives to sell:

*Willy Woo Twitter survey (screenshot). Source: Willy Woo/Twitter*

The views, thoughts and opinions expressed here are the authors’ alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.