Market Analysis Report (02 Jan 2023)

Crypto management firm Valkyrie Investments, one of Grayscale’s rivals, has announced a plan to become the sponsor and manager of the Grayscale Bitcoin Trust (GBTC) fund. As part of its plan to sponsor GBTC, the Tennessee-based company also launched a fund to take advantage of its discount.

The fund, the Valkyrie Opportunistic Fund, LP is set to take advantage of GBTC’s discount on the value of its underlying bitcoin. The firm previously launched a bitcoin trust and bitcoin-related exchange-traded fund in 2021.

In its proposal, Valkyrie wrote:

“We understand that Grayscale has played an important role in the development and growth of the bitcoin ecosystem with the launch of GBTC, and we respect the team and the work that they have done. However, in light of recent events involving Grayscale and its family of affiliated companies, it is time for a change.”

The firm said it wants to facilitate GBTC redemptions at net asset value (NAV) for investors through a Regulation M filing. It also proposed to lower the fees to 75 basis points, as opposed to the current 200 basis points.

Valkyrie would offer GBTC redemptions in both BTC and cash. Its proposal comes at a time in which GBTC shares hit a record-high discount rate of over 50% to NAV.