Grayscale Bitcoin Trust Shareholders Plotting a Revolt

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  • Grayscale Bitcoin Trust shareholders are getting so fed up with their lot that they are allegedly engaged in a revolt
  • The value of GBTC shares has been dropping heavily for over two years
  • GBTC holders cannot sell their shares until the trust becomes a Bitcoin ETF

Grayscale Bitcoin Trust shareholders are getting so fed up with their lot that they are engaged in a revolt, according to David Bailey, Bitcoin Magazine owner. Trustnodes reported yesterday that 20% of GBTC shareholders have now signed up to redeem the trust, essentially asking for it to be unwound, after a terrible performance that has seen the value of trust consistently decrease in value for over two years, leaving it in negative territory compared to the value of its Bitcoin holdings.

GBTC Shares on Two-year Losing Streak

Grayscale’s problems technically date back to February 2021 when the GBTC premium turned into a discount, but in truth the issues date back further than that. GBTC launched in 2013 and was the only way that institutions could safely gain exposure to Bitcoin. Between the time of its launch and 2019, GBTC shares were doing very well, chiefly because it was the only game in town for big players.

However, over time many more avenues for institutions have opened up, particularly in the last couple of years, which led to supply outstripping demand for GBTC shares for the first time. Grayscale’s trust structure makes it inflexible to ever-changing supply and demand, and its collapse from premium to discount can be seen on its value chart:


The Grayscale Bitcoin Trust owns over 630,000, which has a valuation today of almost $11 billion, but the total value of GBTC shares is only $6.8 billion. What makes it worse is that GBTC holders cannot sell their positions until Grayscale converts its fund to a Bitcoin ETF, something that was rejected last year, leading to Grayscale filing a lawsuit. This isn’t a surprise – it’s desperate. To compound the misery for GBTC holders, they are forced to pay a 2% annual fee while they wait to get their hands on their massively undervalued shares.

Grayscale Won’t Reveal Bitcoin Addresses

It isn’t just the valuation drop that has concerned shareholders. Zhu Su, founder of now bankrupt crypto hedge fund Three Arrows Capital, accused Grayscale of violating securities laws “on a  massive scale”. This, he said, is why it won’t reveal the addresses holding the trust’s bitcoin, which has led to calls that it is insolvent.

Bailey agrees, and also points to the open letter recently penned by Gemini co-founder Cameron Winklevoss in which he accused Grayscale and Genesis owner Digital Currency Group (DCG) of commingling funds. 

Shareholders have finally had enough, and a quiet revolt is taking place. Bailey says that a fifth of GBTC holders have now signed up for the fund to be redeemed, arguing that the DCG “sold a fiction to Wall Street” in the belief that it couldn’t lose.

He adds that Grayscale “laughed as they pillaged retail and retirees” but didn’t expect investors to “fight back”, which they are now doing in the only way they can. Whether it will be enough to pressure Grayscale into folding remains to be seen.