Digital Currency Group (DCG), the parent company of the world’s largest crypto asset manager Grayscale has approved to increase the purchase of Grayscale Bitcoin Trust ($GBTC) worth $750 million in a recent announcement. The recent purchase would increase the GBTC holding by $500 million on top of early authorization for a $250 million purchase.
As per the latest holding reports, DCG has purchased $193.5 million worth of GBTC and the additional $500 million purchase would be funded by the cash surplus of the company.
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.
Did Growing Negative Premium Fuel the Recent Buyback by DCG?
The firm didn’t clarify the reason behind the recent increase in allocation of GBTC by $500 million, however, many believe the growing negative premium on Grayscale’s flagship fund could be one of the key reasons behind the increase in allocation by the parent company. The GBTC premium has been negative for a couple of months now and the last recorded rate was nearly -10%.
Grayscale Bitcoin Trust is one of the most sought-after Bitcoin investment vehicles for US investors in absence of any regulated ETF in the market. However, many have pointed towards the obscurity in legality behind these private funds and the chances of facing the ire of regulatory bodies. This is a key reason why the world’s largest investment group is now looking to convert its Bitcoin fund into a regulated ETF. As of now a total of 8 Bitcoin ETFs is pending before the US SEC with the VanEck one getting delayed by another couple of months.