Grayscale Bitcoin Trust falls as cryptocurrencies slide again

FILE PHOTO: Illustration shows representation of cryptocurrencies plunging into water

(Reuters) - Grayscale Bitcoin Trust, the world's largest bitcoin fund, fell almost 7% on Wednesday, as investors dumped more digital assets after last week's high-profile unraveling of crypto exchange FTX.

Crypto investment bank Genesis Global Trading said in a tweet it was temporarily suspending redemptions and new loan originations in the wake of FTX's collapse, which has given cryptocurrencies another hammering this year.

Genesis, the latest company to be hit by FTX turmoil, is owned by Digital Currency Group (DCG), which is also the parent company of Grayscale.

DCG tweeted that freezing Genesis' lending business had no impact on the firm and its wholly-owned subsidiaries.

Grayscale said it would be business as usual for its products and its underlying assets were unaffected.

Grayscale Bitcoin Trust's discount to its net asset value, which hit an all-time low of 41% last week, is now at 37%. Shares have not traded at a premium since March 2021, Coinglass data showed.

The trust is a close-ended fund, whose short-term price is driven by supply, demand and market sentiment unlike an exchange traded fund that generally trades in line with its value.

In June, Grayscale sued the U.S. Securities and Exchange Commission for nixing the digital asset manager's proposal to convert bitcoin trust into a spot bitcoin exchange traded fund.

Grayscale bitcoin fund, which has $10.7 billion worth of bitcoin under management, has slumped about 75% in the past 12 months.

Grayscale Ethereum Trust, which has $3.8 billion assets under management, shed 81% in the past year. By comparison, bitcoin, which was down 2% at $16,505 on Wednesday, has slumped 72% in the past year.

(Reporting by Medha Singh and Lisa Pauline Mattackal in Bengaluru)