Digital Currency Group plans to buy additional $500 million worth of GBTC shares as trade discount continues


Digital Currency Group (DCG), the parent company of Grayscale, announced Monday that it plans to buy an additional $500 million worth of Grayscale Bitcoin Trust (GBTC) shares.

The new plan increases DCG's limit of such purchases to up to $750 million. In March, the company said it would buy up to $250 million worth of GBTC shares.

As of April 30, DCG said it had purchased $193.5 million worth of GBTC shares.

The additional buying plan comes as GBTC continues to trade at a discount for almost three months, meaning the market price of its shares is trading below its net asset value or NAV.

Buying back of shares is a common strategy for companies looking to increase the price of their shares by simultaneously creating demand while decreasing the number of shares outstanding.

The current discount of GBTC is around 10%, and there are several factors are behind the fall, including competing products in the market, as The Block reported last month.

The persistent discount recently led Marlton, an investment management firm with considerable GBTC holdings, to write an open letter to Grayscale.

Market experts recently told The Block that converting GBTC into a bitcoin ETF is one of the best options for Grayscale. Indeed, the firm announced last month that it is "100% committed" to the conversion. Still, U.S. regulators have yet to approve a bitcoin ETF in the country, and the Securities and Exchange Commission recently delayed a determination on a proposed ETF from VanEck. 

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Oct 15, 2021, 2:54AM UTC