Digital Currency Group (DCG), a venture capital firm focused on the digital asset market and also the parent company behind Grayscale Investments has announced the purchase of $250 million in Grayscale Bitcoin Trust (GBTC) shares. The said purchase would be done using the cash on hand in the open market.
— Barry Silbert (@BarrySilbert) March 10, 2021
The announcement comes at a time when Grayscale’s Bitcoin premiums are at their lowest which has made many believe that the move to make such a massive purchase could by its parent company be intentional and to fill the growing discount.
Seeing this as a desperate attempt to fix the GBTC discount (this + etf announcement)….feeling is some big players are insolvent
— ownyourutopia (@ownyourutopia) March 10, 2021
The official statement suggests that under the authorized purchase would not necessarily see a transfer of shares and it read,
The share purchase authorization does not obligate DCG to acquire any specific number of shares in any period, and may be expanded, extended, modified, or discontinued at any time. The actual timing, amount, and value of share purchases will depend entirely upon a number of factors, including the levels of cash available, price, and prevailing market conditions.
Crypto Community Calls DCG Purchase a Bailout
The Grayscale Investment Fund has grown in popularity with rising Bitcoin prices and has over $40 billion worth of assets under its management. The GBTC Premium has remained high throughout its life span before registering a massive dip during the ongoing price cycle. This has led many to compare the DCG purchase to the Tether-Bitfinex bailout.
I was thinking BitFinex/tether. But ya.
— EZ (HODL ₿itcoin) (@EZJunior1020) March 10, 2021
The firm’s recent job page update suggests it is looking for ETF managers and planning to start a whole new ETF division as the new job page shows 9 ETF-related vacancies. These several factors combined had made many believe that the firm is actively looking to focus on launching a regulated ETF.
The fact that there is a lot of obscurity around legality and regulations around Bitcoin-based investment funds including Grayscale can also be one of the reasons behind the ETF push.