Digital Currency Group, the parent of Grayscale, said it’s authorized the purchase of up to $250 million worth of the lagging shares of the Grayscale Bitcoin Trust (OTCQX: GBTC), its subsidiary's flagship product.
- In an announcement Wednesday, DCG – which is also the parent company of CoinDesk – said it will be buying GBTC shares on the open market.
- The purchase comes as the price of GBTC shares has fallen from an all-time high of $58.22 set last month to $41.40 last week before rebounding somewhat. In addition, the shares, which had long traded at a premium to to the price of bitcoin held in the trust, recently started trading at a discount.
- Repurchasing is a common tool among companies who are trying to increase the price of those shares by simultaneously creating demand while decreasing the number of shares outstanding.
- In recent trading, GBTC shares were up 4.34% to $51.25.
- DCG said plans to use cash on hand to fund any purchases, which it said will be made in compliance with Rule 10b-18 of the Securities Exchange Act of 1934.
- “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,” said the company.
- The Grayscale Bitcoin Trust launched in 2013 is the world’s largest bitcoin fund, offering investors the opportunity to gain exposure to the leading cryptocurrency.
- According to its latest figures, Grayscale currently has $42.1 billion in net assets under management across all its cryptocurrency trusts and funds.
UPDATE (March 10, 18:00 UTC): Adds background on share repurchases.
CORRECTED (March 19, 15:55 UTC): Corrects name of Digital Currency Group.