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Grayscale’s Crypto Fund Attracts Capital Despite Underperformance -Breaking

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Grayscale’s Crypto Fund Attracts Capital Despite Underperformance
    • Capital continues to pour into Grayscale’s flagship GBTC fund despite the discount to spot price standing at 30%.
    • Grayscale has a better chance of GBTC becoming an exchange-traded fund in the next year.
    • Weekly sessions show that investors have invested between $10 and $120 millions since December 2021.

The flagship Grayscale trust continues to attract capital, as it looks like the fund will be approved to trade later in the year.

As the world has been experiencing consecutive shocks over the last few months, the trust attracted global investments. One of these shocks includes the dramatic selloff in technology stocks, which was then followed by Russia’s invasion of the Ukraine which left many fund managers with double-digit losses. The GBTC Fund was subsequently underperforming.

The ARK Next Generation ETF, and the ARK Next Generation ETF are two examples of funds. Morgan Stanley Insight Fund (NYSE: ) Both funds experienced negative year over-year results due to the high level of exposure they have in Grayscale Trust. Despite that, none of these funds sold significant amounts of GBTC.

Many factors played a role in GBTC’s underperformance, including the growing level of competition from exchange-traded funds in Canada. ETFs offer investors the option to participate in Share Redemptions. This is a method by which a fund can repurchase shares based upon supply and demand.

Grayscale’s parent company, Digital Currency Group, has attempted to reduce the discount by buying back GBTC shares. After the ProShares Bitcoin Strategy ETF launched, holding futures contracts, they failed to make any progress. This ended up pushing GBTC’s price further away from Bitcoin’s spot price.

According to Glassnode data, institutional investors are still returning to Grayscale Bitcoin Trust (GBTC), as the spot price is now at a discount of nearly 30%.

Ever since December 2021, weekly sessions have shown investors investing between $10 million and $120 million into Grayscale’s flagship fund. In the final week of February, there was a $140 million capital inflow.

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