Crypto and Bitcoin critic thinks a large crypto fund was the main reason for BTC’s rally in 2021
Famed Bitcoin Critic and Gold Advocate Strikes Again at His Official Twitter account, now stating that Grayscale Bitcoin’s confidence was one of the main reasons the first cryptocurrency hit nearly $70,000. He even described a particular scheme used by the institutional investor.
According to Schiff, Grayscale was actively advertised on CNBC to attract the attention of retail investors, who were willing to pay “huge” premiums to the net asset value of the trust. After attracting retail funds, Grayscale issued more shares to institutions and used the proceeds to buy Bitcoin, which directly pushed the price to new highs.
The #Shades of grey Bitcoin Trust was one of the main reasons #Bitcoins rallied to $69,000. He announced on @CNBC to get retail investors to pay huge premiums to NAV. Then he issued new shares to NAV institutions, using the proceeds to buy more Bitcoin, pushing the price even higher.
— Peter Schiff (@PeterSchiff) November 21, 2022
Technically, the economist is wrong; by issuing more shares, Grayscale was able to raise more capital which it successfully used to buy as much Bitcoin from the market as possible. Unfortunately, he played a cruel joke on GBTC holders.
Due to the mismatch between the total number of shares and the net asset value of the trust, GBTC fell to sell at a discount and began to significantly underperform cash assets, making Grayscale’s fund a medium questionable to gain exposure to the cryptocurrency market.
According to market data, Grayscale’s discount on NAV recently hit unseen values, hitting 43% at a low. While such a deep discount should have attracted institutional traders, the limits the fund imposes on its own investors put off most of them, who tend to choose alternative options like futures, ETFs or spot exposure.
Recently, rumors around Digital Currency Group suggested that the company was looking for ways to realize its GBTC shares in the open market to cover a $1 billion hole in its balance sheet due to Genesis’ liquidity crunch.