Grayscale Bitcoin Cash Trust Fails to Track NAV, Trades at Steep Discounts

TL;DR

**BCHG is a broken product for direct BCH exposure; avoid it until a redemption mechanism is implemented to close the NAV discount.**

AI Summary

Grayscale Bitcoin Cash Trust (BCHG) filed its 10-K for the fiscal year ended June 30, 2025, revealing its primary objective to reflect the value of Bitcoin Cash (BCH) held by the Trust, less expenses. However, the Trust has consistently failed to meet this objective, with Shares trading at significant premiums and discounts to its Net Asset Value (NAV) per Share. From August 18, 2020, to June 30, 2025, the Shares experienced a maximum premium of 1,852% and a maximum discount of 59%, with an average premium of 238% and an average discount of 21%. As of June 30, 2025, BCHG traded at a 10% discount to its NAV per Share. The Trust holds approximately 2.0% of the total BCH in circulation, which had an aggregate market value of approximately $10.1 billion as of June 30, 2025, making it the twelfth largest digital asset by market capitalization. Key risks include extreme price volatility of BCH, the largely unregulated nature of Digital Asset Trading Platforms, and the absence of an ongoing redemption program, which prevents arbitrage and contributes to the NAV divergence. The Sponsor structure also changed, with Grayscale Investments Sponsors, LLC (GSIS) becoming the sole Sponsor effective May 3, 2025.

Why It Matters

Grayscale Bitcoin Cash Trust's persistent failure to track its Net Asset Value (NAV) per Share, evidenced by a 10% discount as of June 30, 2025, and historical premiums up to 1,852%, is critical for investors. This divergence means investors are not getting direct exposure to BCH's underlying value, but rather a product subject to significant market inefficiencies and premium/discount volatility. For employees and customers, the stability and transparency of such investment vehicles are paramount, and this lack of tracking can erode confidence. In the broader market, this highlights the ongoing challenges and immaturity of digital asset investment products, especially those without robust arbitrage mechanisms, contrasting sharply with more efficient Bitcoin ETFs.

Risk Assessment

Risk Level: high — The risk level is high due to the Trust's consistent failure to meet its investment objective, with Shares trading at substantial premiums and discounts to NAV. For example, from August 18, 2020, to June 30, 2025, the maximum premium was 1,852% and the maximum discount was 59%, with the Shares trading at a 10% discount as of June 30, 2025. This is exacerbated by the lack of an ongoing redemption program, which prevents arbitrage and contributes to price volatility.

Analyst Insight

Investors should exercise extreme caution with BCHG due to its significant and persistent NAV discount. Consider alternative investment vehicles that offer more direct and efficient exposure to Bitcoin Cash, or wait for the implementation of a redemption program that could stabilize the Share price relative to its underlying assets.

Key Numbers

• $237,646,437 — Aggregate market value of Shares held by non-affiliates (as of December 31, 2024)
• 47,123,300 — Number of Shares outstanding (as of September 2, 2025)
• 1,852% — Maximum premium of Shares over NAV per Share (from August 18, 2020, to June 30, 2025)
• 238% — Average premium of Shares over NAV per Share (from August 18, 2020, to June 30, 2025)
• 59% — Maximum discount of Shares below NAV per Share (from August 18, 2020, to June 30, 2025)
• 21% — Average discount of Shares below NAV per Share (from August 18, 2020, to June 30, 2025)
• 10% — Discount of Shares to NAV per Share (as of June 30, 2025)
• 2.0% — Percentage of BCH in circulation held by the Trust (as of June 30, 2025)
• $10.1 billion — Aggregate market value of Bitcoin Cash (as of June 30, 2025)
• 12th — Ranking of BCH by market capitalization (as of June 30, 2025)

Key Players & Entities

• Grayscale Bitcoin Cash Trust (BCH) (company) — registrant
• Grayscale Investments Sponsors, LLC (company) — sole Sponsor effective May 3, 2025
• Bitcoin Cash (company) — underlying digital asset
• Digital Currency Group, Inc. (company) — indirect parent of Sponsors
• CSC Delaware Trust Company (company) — Trustee of the Trust
• Continental Stock Transfer & Trust Company (company) — Transfer Agent of the Trust
• Coinbase Custody Trust Company, LLC (company) — Custodian of the Trust
• U.S. Securities and Exchange Commission (regulator) — regulates filings
• CoinMarketCap.com (company) — tracks digital asset market capitalization
• CoinDesk Bitcoin Cash Price Index (BCX) (company) — index for BCH pricing

FAQ

Risk Factors

• Volatility of Bitcoin Cash Price [high — market]: The Trust's primary objective is to reflect the value of Bitcoin Cash (BCH) held by the Trust, less expenses. However, the value of BCH is subject to extreme price volatility, which can significantly impact the Trust's Net Asset Value (NAV) per Share. From August 18, 2020, to June 30, 2025, Shares traded at a maximum premium of 1,852% and a maximum discount of 59%.
• Unregulated Digital Asset Trading Platforms [high — regulatory]: The largely unregulated nature of Digital Asset Trading Platforms poses significant risks. These platforms may experience security breaches, operational failures, or regulatory actions that could impact the Trust's ability to hold and value its BCH holdings, and consequently, the trading price of its Shares.
• Absence of Redemption Program [high — operational]: The Trust does not have an ongoing redemption program, which prevents arbitrage opportunities. This lack of redemption mechanism is a key contributor to the significant divergence between the trading price of the Shares and the Trust's NAV per Share, as seen in the historical premiums and discounts.
• Concentration of Holdings [medium — market]: As of June 30, 2025, the Trust held approximately 2.0% of the total BCH in circulation. While this represents a significant portion, the overall market capitalization of BCH was approximately $10.1 billion, making it the twelfth largest digital asset. Any adverse market movements in BCH could disproportionately affect the Trust.
• Evolving Regulatory Landscape [medium — regulatory]: The regulatory environment for digital assets is still evolving. Changes in regulations could impact the Trust's operations, the value of BCH, or the ability to custody digital assets, potentially affecting the Trust's ability to meet its investment objective.

Industry Context

The digital asset market, particularly for cryptocurrencies like Bitcoin Cash (BCH), is characterized by high volatility and an evolving regulatory landscape. As of June 30, 2025, BCH ranked as the twelfth largest digital asset by market capitalization, with an aggregate market value of approximately $10.1 billion. The Grayscale Bitcoin Cash Trust (BCHG) aims to track the value of BCH, but its performance is heavily influenced by the underlying asset's price swings and market sentiment.

Regulatory Implications

The largely unregulated nature of Digital Asset Trading Platforms presents a significant risk. Furthermore, the evolving regulatory environment for digital assets globally could introduce new compliance burdens or restrictions that may impact the Trust's operations and the value of its holdings.

What Investors Should Do

1. Monitor the premium/discount to NAV: Investors should closely track the trading price of BCHG shares relative to its Net Asset Value (NAV) per Share, given the historical significant divergences (max premium 1,852%, max discount 59%).
2. Assess BCH volatility risk: Understand that the Trust's performance is directly tied to the extreme price volatility of Bitcoin Cash (BCH), which can lead to substantial gains or losses.
3. Consider the lack of redemption: Be aware that the absence of an ongoing redemption program prevents arbitrage, which can exacerbate price discrepancies between the Trust's shares and its underlying assets.
4. Evaluate sponsor stability: Note the recent change in sponsorship to Grayscale Investments Sponsors, LLC (GSIS) as of May 3, 2025, and consider its potential impact on the Trust's management and strategy.
5. Review platform risks: Understand the risks associated with trading on largely unregulated Digital Asset Trading Platforms, which could affect the custody and valuation of the Trust's BCH holdings.

Key Dates

• 2025-05-03: Grayscale Investments Sponsors, LLC (GSIS) became the sole Sponsor. — This change in sponsorship structure could impact the Trust's governance and operational management.
• 2025-06-30: Fiscal year end for the 10-K filing. — Provides the latest financial and operational data for the Trust, including its holdings and NAV performance.
• 2025-09-02: Number of Shares outstanding reported as 47,123,300. — Indicates the total number of units representing ownership in the Trust as of a specific date.
• 2024-12-31: Aggregate market value of Shares held by non-affiliates reported as $237,646,437. — Represents the market value of the Trust's shares held by the public, excluding insiders.

Glossary

Net Asset Value (NAV) per Share

The value of a trust's assets minus its liabilities, divided by the number of outstanding shares. It represents the theoretical value of each share. (Crucial for understanding the performance of the Grayscale Bitcoin Cash Trust, as the trading price of its shares often deviates significantly from its NAV per Share.)

Sponsor

The entity responsible for the creation, management, and administration of the Trust. In this case, Grayscale Investments Sponsors, LLC (GSIS). (The Sponsor plays a key role in the Trust's operations and governance. Changes in sponsorship can affect the Trust's direction.)

Digital Asset Trading Platform

An online platform where users can buy, sell, or trade digital assets like Bitcoin Cash. (These platforms are critical for the trading of BCH and, by extension, the pricing of the Trust's shares. Their unregulated nature poses a significant risk.)

Arbitrage

The simultaneous purchase and sale of an asset in different markets to profit from tiny differences in the asset's listed price. In the context of trusts, it often involves redeeming shares for underlying assets when the share price is at a premium to NAV. (The absence of an ongoing redemption program prevents arbitrage, contributing to the persistent premiums and discounts observed in the Trust's share price relative to its NAV.)

Year-Over-Year Comparison

The 10-K for the fiscal year ended June 30, 2025, highlights persistent issues with Grayscale Bitcoin Cash Trust (BCHG) failing to track its Net Asset Value (NAV) per Share, with historical premiums reaching 1,852% and discounts up to 59%. A key change noted is the sole sponsorship by Grayscale Investments Sponsors, LLC (GSIS) effective May 3, 2025. The Trust continues to hold a significant portion of BCH in circulation, approximately 2.0% as of June 30, 2025, valued at $10.1 billion, underscoring the market risk associated with the digital asset's volatility.

Key Financial Figures

• $192.4 million — oin Cash and Bitcoin were approximately $192.4 million and $8.6 billion, respectively. As of J
• $8.6 b — n were approximately $192.4 million and $8.6 billion, respectively. As of June 30, 202
• $10.1 b — value of Bitcoin Cash was approximately $10.1 billion, as compared to the $2,130.5 bill
• $2,130.5 billion — ately $10.1 billion, as compared to the $2,130.5 billion aggregate value of Bitcoin. As of June

Filing Documents

• bchg-20250630.htm (10-K) — 2601KB
• bchg-ex10_5.htm (EX-10.5) — 172KB
• bchg-ex31_1.htm (EX-31.1) — 26KB
• bchg-ex31_2.htm (EX-31.2) — 26KB
• bchg-ex32_1.htm (EX-32.1) — 9KB
• bchg-ex32_2.htm (EX-32.2) — 9KB
• img198296977_0.jpg (GRAPHIC) — 685KB
• img198296977_1.jpg (GRAPHIC) — 600KB
• img198296977_2.jpg (GRAPHIC) — 508KB
• 0001732409-25-000005.txt ( ) — 10684KB
• bchg-20250630.xsd (EX-101.SCH) — 419KB
• bchg-20250630_htm.xml (XML) — 873KB

Forward-Looking Statements

Forward-Looking Statements This Annual Report on Form 10-K contains "forward-looking statements" with respect to the financial conditions, results of operations, plans, objectives, future performance and business of Grayscale Bitcoin Cash Trust (BCH) (the "Trust"). Statements preceded by, followed by or that include words such as "may," "might," "will," "should," "expect," "plan," "anticipate," "believe," "estimate," "predict," "potential" or "continue," the negative of these terms and other similar expressions are intended to identify some of the forward-looking statements. All statements (other than statements of historical fact) included in this Annual Report that address activities, events or developments that will or may occur in the future, including such matters as changes in market prices and conditions, the Trust's operations, the plans of Grayscale Investments, LLC ("GSI"), the sponsor of the Trust before January 1, 2025, Grayscale Operating, LLC ("GSO"), the co-sponsor of the Trust from January 1, 2025 to May 3, 2025, and Grayscale Investments Sponsors, LLC ("GSIS"), the co-sponsor of the Trust from January 1, 2025 to May 3, 2025 and the sole remaining sponsor thereafter (each of GSI, GSO and GSIS, the "Sponsor", as the context may require, and GSO and GSIS, together, the "Co-Sponsors"), and references to the Trust's future success and other similar matters are forward-looking statements. These statements are only predictions. Actual events or results may differ materially from such statements. These statements are based upon certain assumptions and analyses the Sponsor made based on its perception of historical trends, current conditions and expected future developments, as well as other factors appropriate in the circumstances. Whether or not actual results and developments will conform to the Sponsor's expectations and predictions, however, is subject to a number of risks and uncertainties, including, but not limited to, those described in "Part I. I

Business

Business 1 Item 1A.

Risk Factors

Risk Factors 46 Item 1B. Unresolved Staff Comments 79 Item 1C. Cybersecurity 79 Item 2.

Properties

Properties 80 Item 3.

Legal Proceedings

Legal Proceedings 80 Item 4. Mine Safety Disclosures 80 PART II Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 81 Item 6. [Reserved] 81 Item 7.

Management's Discussion and Analysis of Financial Condition and Results of Operations

Management's Discussion and Analysis of Financial Condition and Results of Operations 82 Item 7A.

Quantitative and Qualitative Disclosures about Market Risk

Quantitative and Qualitative Disclosures about Market Risk 88 Item 8.

Financial Statements and Supplementary Data

Financial Statements and Supplementary Data 88 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 88 Item 9A.

Controls and Procedures

Controls and Procedures 89 Item 9B. Other Information 89 Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections 89 PART III Item 10. Directors, Executive Officers and Corporate Governance 90 Item 11.

Executive Compensation

Executive Compensation 91 Item 12.

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 91 Item 13. Certain Relationships and Related Transactions and Director Independence 92 Item 14. Principal Accountant Fees and Services 93 PART IV Item 15. Exhibits and Financial Statement Schedules 94 Item 16. Form 10-K Summary 96 Glossary of Defined Terms 97 iv PART I

B usiness

Item 1. B usiness Overview of the Trust and the Shares Grayscale Bitcoin Cash Trust (BCH) (formerly known as Bitcoin Cash Investment Trust) (the "Trust") is a Delaware Statutory Trust that was formed on January 26, 2018 by the filing of the Certificate of Trust with the Delaware Secretary of State in accordance with the provisions of the Delaware Statutory Trust Act. The Trust's purpose is to hold Bitcoin Cash ("BCH"). Bitcoin Cash, an alternative software implementation of Bitcoin, was created in 2017 by a group of Bitcoin miners resulting in a hard fork of Bitcoin. Although Bitcoin Cash is very similar to Bitcoin, there are several key differences between the Bitcoin Cash Network and the Bitcoin Network. The fundamental difference between Bitcoin and Bitcoin Cash is the maximum block size used by each network. Bitcoin uses the SHA-256 algorithm, which is preferred for parallel processing, but is also easily used to build application-specific integrated circuits (ASICs) to mine the network more efficiently. Like Bitcoin, Bitcoin Cash employs the SHA-265 algorithm, which results in the network competing with Bitcoin for miner hash rate. Bitcoin Cash has a current block size of 32MB compared to 1MB on the Bitcoin Network. Bitcoin Cash blocks are also generated every ten minutes, approximately the same rate as Bitcoin's block production. Due to the roughly equal block production rates, Bitcoin Cash halvings also take place approximately every four years, occurring every 210,000 blocks, like Bitcoin. The Bitcoin Cash mining difficulty is also less than one one-hundredth of Bitcoin's, making it significantly easier to mine blocks and earn rewards. Additionally, Bitcoin Cash and Bitcoin both have a maximum supply of 21 million coins. Bitcoin Cash has a current circulating supply of 19.9 million coins as of June 30, 2025, which is approximately the same as Bitcoin's circulating supply. As of June 30, 2025, the 24-hour trading volume of Bitcoin Cash and Bitcoin were