Digital Currency Group, the parent company of the digital asset manager Grayscale, has decided to up its purchase of Grayscale Bitcoin Trust (GBTC) by $500 million. The firm plans to purchase $750 million worth of GBTC shares instead of the initial $250 million.
The GBTC has been trading at a premium for some months for several reasons, such as competition from non-US Bitcoin exchange-traded funds (ETFs). This could be attributed to the reluctance of approving an ETF of the Securities and Exchange Commission (SEC) in the US.
Therefore, companies’ share buyback is a common strategy used by companies to boost the value of the stock by creating demand and lowering the number of outstanding shares.
Grayscale to Convert GBTC Fund to ETF
DCG had earlier purchased $193.5 million worth of GBTC shares on April 30. The firm plans to use its cash on hand to make the remaining purchases. However, the repurchase by DCG is not an obligation, and the terms can be altered at any moment.
The GBTC shares have been trading at a negative for months, with the last recorded value at about -10%. However, the firm had earlier announced its plan to convert the GBTC fund to a Bitcoin ETF once the SEC approves an ETF in the US.