Summary BCHG has shifted from a premium to a 13% NAV discount, mainly due to private placement shares exiting lockup. Bitcoin Cash network fundamentals are weak, with daily active addresses and transactions at multi-year lows, undermining a bullish thesis. Despite poor fundamentals, BCH price has surged over 85% since April, driven by speculative demand and rising open interest. I reiterate a 'hold' rating on both BCHG and BCH, as speculative momentum is not supported by network usage or strong fundamentals. A little over three months ago in mid-March, I wrote a piece for Seeking Alpha covering both Bitcoin Cash ( BCH-USD ) and the Grayscale Bitcoin Cash Trust ( OTCQX:BCHG ). At that time, BCHG was trading at a very small premium to net asset value, or NAV, after having opened 2025 at a 43% premium to the value underlying BCHG shares. In this update, we'll look at the current NAV rate trend for BCHG, shareholder insights, as well as network activity data from the Bitcoin Cash blockchain to determine what, if any, BCH positioning broader Digital Asset investors should consider. Grayscale Bitcoin Cash Trust Data by YCharts After fighting between a NAV rate premium and discount earlier this year, the market has taken BCHG decidedly into discount territory over the last two months. At a 12.9% discount to net asset value, BCHG now offers the second largest of Grayscale's top five single-asset CEFs by assets under management: Fund Name AUM Market Price/Share NAV per Share Premium/Discount Grayscale Bitcoin Cash Trust ( OTCQX:BCHG ) $196,854,069.91 $3.64 $4.18 -12.9% Grayscale Ethereum Classic Trust ( OTC:ETCG ) $178,479,191.90 $8.15 $12.75 -36.1% Grayscale Litecoin Trust ( OTCQX:LTCN ) $170,006,609.14 $6.83 $7.01 -2.6% Grayscale Solana Trust ( OTCQX:GSOL ) $75,027,218.70 $11.50 $10.38 10.8% Grayscale Stellar Lumens Trust ( OTCQX:GXLM ) $27,626,799.58 $19.01 $19.95 -4.7% Source: Grayscale, as of 6/27 closing prices For those who have followed my work covering Grayscale's closed-end crypto funds, the shift from premium to discount should not come as a surprise at all. This is from my closing summary from my March piece: I've warned about this NAV premium compression each time I've written about the fund. We're clearly at the point where the premium has all but vanished and the majority of private placement lockups from the last year haven't even really started yet. Given that, I wouldn't rule out the possibility that we see BCHG begin to trade at a discount again. What we have seen twice since BCHG became trade-able through the secondary market has been a surge in private placements during times of high premiums. We can see this through the shares outstanding in the chart below. Private placements happened when the fund initially launched publicly in 2020 and again when the NAV rate flipped back to a large premium in late 2023: BCHG Shares vs NAV Rate (Grayscale, Author's Chart) After having been closed during the discount days of Crypto Winter, BCHG private placements opened again in early-2024 and as newly issued BCHG shares have increasingly been released from lockup, the NAV rate premium for BCHG has gone away entirely. Again, pressure on the NAV rate premium has almost assuredly come from private placements coming out of lockup. Of the 46.7 million BCHG shares outstanding, related parties own a small amount and selling from those entities has been minimal per the fund's May 10-Q: The Trust considered the following entities, their directors, and certain employees to be related parties of the Trust as of March 31, 2025: DCG, GSO, GSIS, and Grayscale Securities. As of March 31, 2025 and June 30, 2024, 585,028 and 589,898 Shares of the Trust were held by related parties of the Trust, respectively. Bold above is my emphasis. Related parties own slightly more than 1% of shares outstanding and have sold less than 1% of their owned-shares over the last 3 quarters. When analyzing funds like BCHG, it's also worth considering the market and pricing dynamics of the blockchain network asset itself to determine if there is a fundamental problem with the asset that could be impacting the NAV rate. Bitcoin Cash Network Activity & Price Signals Looking at standard usage metrics like Daily Active Addresses (DAAs) and Transaction Count (Tx Cnt) in the chart below, it's difficult for me to find a reason to be bullish BCH on any fundamental narrative: 30 Day Average DAAs vs TXs (CoinMetrics) 30 Day Active Addresses hit 26.7k at one point in June. That was a six year low for BCH DAAs and a 45% drop from end of 2024 levels. The transaction count story isn't all that better. At 14.1k on June 25th, 30 Day Average transactions hit a 2 year low and were down 57% since the beginning of 2025. Data by YCharts Despite the apparent lack of a fundamental usage story, it hasn't stopped the market from taking the price of BCH higher this year. Since the beginning of 2025, BCH has appreciated roughly in line with the price of Bitcoin ( BTC-USD ) but it is dramatically outperforming BTC since the tariff-concern lows in broad risk markets in early-April. In a little under three months, BCH has surged by over 85%. Bitcoin Cash OI (CoinGlass) There has been a noticeable spike higher in open interest since the end of May with $309 million in OI on May 31st surging up to $592 million on June 19th. This was the highest level of OI for Bitcoin Cash since April 2024 and one of the highest single day open interest levels for BCH in at least the last 5 years. These moves in OI are often accompanied by correlated moves in price. However, unlike the prior two OI spikes in June 2023 and April 2024, this June 2025 move has been more of a grind higher that has taken several weeks from low to high. Technically, BCH is quickly approaching a level that would appear to be key resistance: BCH Weekly Chart (TrendSpider) The formation above on the weekly chart shows BCH quickly approaching a diagonal resistance trend that dates back the last 15 months. The coin isn't yet overbought on the weekly or daily charts and could conceivably reach the $570 range fairly quickly assuming the trend-line is tested. Perhaps adding fuel to any move is the fact that BCH is above key MAs on both the weekly and daily charts: BCH Daily Chart (TrendSpider) The daily chart shows 50 and 100 day MAs moving higher with the 100 day MA soon to cross above a 200 day MA that hasn't gone much of anywhere since November. Perhaps aided by a 66 'greed' reading in the Crypto Fear and Greed Index, the setup for BCH implies at least a 10% rise from current levels - and potentially considerably higher if the trend resistance is actually broken. Closing Summary From my vantage, BCH is simply moving on an increase in speculation and nothing more. The coin itself is being used by less people if the trend in Daily Active Addresses is any indication. 30 Day Average DAAs hit a six year low just a week ago as of article submission. Transactions are down as well. Long term believers of BCH could certainly entertain buying BCHG at a 13% discount. The fund has a 6 month private placement lockup period and there are only about 900k shares due to come out of lockup between now and the end of the year. For a fund with 47.1 million shares outstanding, that isn't a huge amount of fresh supply for the market to absorb. Essentially, I don't think lockups should depress the discount too much further. But I do suspect the lack of speculative froth in BCHG is also a signal in and of itself. If risk-on sentiment for Digital Assets was widespread and strong, I would expect BCHG to trade closer to a premium than a 13% discount. Perhaps it will flip back to premium should BCH break out of trend and soar to multi-year highs. It's not a bet that I'm personally making based on the lack of network usage, but stranger things have happened. I'm reiterating both BCHG and BCH as 'holds.'
