Bears in Disbelief: Grayscale Holds 2.7% of Bitcoin Supply, Galaxy Posts Strong Results

Grayscale Investments now holds more than 500,000 Bitcoin in its BTC Trust.

Amidst the ongoing rally that saw BTC hitting $17,700 today, Grayscale Bitcoin Trust also increased its BTC stash, now holding about 2.70% of Bitcoin’s supply. This percentage number goes further up when taking the millions of lost Bitcoin into consideration.

The world’s largest Bitcoin investment product is trading at a 20.7% premium to Bitcoin’s actual price. The company also charges an annual fee of 2%.

Its share GBTC has increased 152% in value in 2020, currently trading at $20.32.

Last week, the fund reported its largest weekly inflow ever with 15,907 BTC worth $215 million.

In the crypto market, bears are also in disbelief with yet another strong week. After recording six green weeks in a row, Bitcoin is at January 7, 2018, highs. This has roughly 99% of the addresses currently holding BTC in profits.

The open interest on CME just went up to a new all-time high of $975 million, accounting for 15.4% of the total open interest in the futures market, which is also at an all-time high of $6.3 billion.

Bitcoin’s blockchain activity is also growing, with the 7-day average of the amount of active BTC addresses at its highest since January 2017 after progressing strongly throughout the bull run this fall.

Not just Bitcoin, but Grayscale’s Ethereum product is also seeing an increase in interest. Grayscale’s Ethereum Trust (ETHE) now holds 2.24% of ETH’s entire cap or $1.175 billion worth of Ether.

In total, Grasyacle has a total of $9.9 million in assets under its management.

Elsewhere, Mike Novogratz’s OTC trading firm, Galaxy, posted strong results in Q3 2020 with over $1.4 billion in trading volume, an increase of 75% YoY. Even LMAX saw its best month ever in Sept. with more than $10 billion in volume.

Galaxy’s net income also came in stronger than last year’s at $44 million vs. a $68 million loss in Q3 2019, which was primarily blamed for the steep losses.

The firm acquired two companies: crypto lender DrawBridge and market maker Blue Fire Capital while sharing its plans to expand in Canada through a partnership with major Canadian investment company CI Global Asset Management to launch a public Bitcoin fund in the country.

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Author: AnTy

Millennials Are Not the Only One Driving “Further Demand” for Bitcoin: JPMorgan

Covering the steepening of cumulative flow trajectory in Grayscale Bitcoin Trust in recent weeks, JPMorgan yet again shared a bullish view on Bitcoin.

According to the largest investment bank, Bitcoin’s corporate endorsements, such as PayPal, have “propagated further demand” for the digital asset.

This can be particularly seen in the ascending of GBTC, which as per JPMorgan suggests that the demand for the leading digital currency is “not only driven by the younger cohorts of retail investors,” the millennials but also institutional investors that includes family offices and asset managers.

Institutional investors are actually the biggest investors in Grayscale’s products.

Grayscale Bitcoin Trust’s October flow trajectory was rather impressive because of the modest outflows seen in the flow trajectory of gold ETFs in comparison. JPMorgan wrote in its latest report,

“This contrast lends support to the idea that some investors that previously invested in gold ETFs such as family offices, maybe looking at bitcoin as an alternative to gold.”

In its last report, the bank noted that because of its competition with gold as an alternative currency, Bitcoin’s potential long-term upside is considerable, as much as 10x from the current level to match the total private actor investment in the precious metal.

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Meanwhile, the current rally has BTC near its “overbought levels,” which means a sell-off could be seen soon, noted the analysts.

Grayscale actually added $500 million in new assets under management in a single day that brought its total AUM at over $9 billion. As we reported, Q3 has been yet another record quarter for Grayscale with $1 billion in inflows.

Last week has been another explosive week for the company, as shared by its Managing Director, Michael Sonnenshein.

The world is choosing Bitcoin as a safe haven over other asset classes at a fast pace, which only puts further pressure on the supply side.

With Grayscale having record inflows, Square selling about double the number of Bitcoins that are being mined, and PayPal, which is 3x of Square and has “eager” customers, also joining in, things are going to get even more interesting.

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Author: AnTy

BlockFi Acquires a 5% Stake in the Grayscale Bitcoin Trust (GBTC), Becomes a Top Shareholder

BlockFi, the crypto lending focused firm, has invested in the Grayscale Bitcoin Trust (GBTC), becoming one of the biggest shareholders. According to a filing made with the U.S Securities Exchange Commission (SEC), the firm purchased 5.07% of the GBTC Trust. Notably, companies in the U.S are required to report through form 13G if they own more than 5% in another firm.

The filing further reveals that the shares acquired by BlockFi translate to 24,235,578 of the GBTC Trust. Going by the latest Grayscale annual filings, this value is roughly 24,235.578 Bitcoins, given that every share is priced at 0.0001 BTC. As per the prevailing crypto market prices, the BlockFi investment in GBTC is roughly $328 million.

GBTC has been operational since 2013, pivoted as a Bitcoin buying avenue without owning the underlying crypto themselves. Currently, the firm manages an AUM of over $6 billion, acquiring an SEC license earlier in the year. In recent months, its value has been growing exponentially, with Q3 inflows breaking record highs to hit the $1 billion mark.

The CEO of BlockFi, Zac Price, said that the move to invest in GBTC is part of an effort to serve their clients better,

“There are lending markets alongside investment opportunities related to the product, and our significant participation enables us to add value for our clients and the marketplace for liquid and illiquid GBTC shares.”

BlockFi is not the only crypto-focused firm that has acquired a significant share of the GBTC Trust; back in June, Three Arrows Capital bought 21,057,237 shares, roughly 6.26% of the total trust at the time.  

Also Read: BTC Potential Investors’ Market Increases by 52% to 32 Million in 2020: Grayscale Survey

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Author: Edwin Munyui

Grayscale’s Record-Breaking Hat-trick, Q3 Inflows Rakes in Over $1 Billion in Investment

Q3 was the best quarter ever for Grayscale Investments, which serves institutional investors, family officers, and private investors.

The largest digital asset manager took in more than $1 billion in new investment in its largest-ever quarterly inflows, marking it the third-straight quarter when the asset manager broke its own record for inflows.

As per the firm’s report on Wednesday, Grayscale now has $5.9 billion in assets under management (AUM).

This growth came despite the global economy taking a nosedive in 2020, and the price of Bitcoin recording gains of only 18%.

Like every time, the leading digital asset remained the most popular cryptocurrency. Grayscale Bitcoin Trust (GBTC), the company’s largest product, saw $719.3 million in new inflows in Q3.

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The persistent demand for GBTC has the company becoming one of the fastest-growing investment products in the world. It is further increasing the appetite for Grayscale’s other products.

Ethereum saw a record growth with 17% of the investment in Grayscale Ethereum Trust (ETH) from new institutional investors.

This week, Grayscale announced that ETHE is now an SEC reporting company that helped in its price surge.

“We believe in a future where multiple digital assets coexist,” said Michael Sonnenshein, managing director at Grayscale Investments. “We believe that there is a future state where bitcoin, Ethereum, and other digital currencies coexist as part of the digital currency cohort” and are “used for different things,” he said.

Grayscale’s Bitcoin Cash, Litecoin, and Digital Large Cap products also saw over 10x growth in inflows quarter-over-quarter.

Interestingly, for the first time, Grayscale found that a majority of its investors, more than half at 57%, were investing at least two of its crypto investment products, up from 44% a year ago and 37% when the company was first launched in 2012.

More institutions are surely coming, which are not only the primary source of investment capital at 81% in Grayscale, but they also increased their average allocation to $2.9 million from the previous quarter’s $2.2 million.

What is more interesting than this “consistent and significant growth” is what has been behind it.

Besides the digital assets outperforming major indices YTD, investors are interested in them because of the ongoing stimulus concern. With more significant fiscal stimulus expected in Q4, “more investors may look to digital assets for yield in this paradigm of monetary inflation,” it says.

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Author: AnTy

Grayscale Ethereum Trust (ETHE) Is Now SEC Registered; ‘Bullish’ for Ether

Grayscale announced a new milestone on Monday, its product Ethereum Trust (ETHE) has now officially become an SEC reporting company.

With this latest update, accredited investors who purchase Grayscale Ethereum trust shares will have an earlier liquidity opportunity. This means the holding period of these shares is now halved, reduced from 12 months to 6 months, the same as its bitcoin product Grayscale Bitcoin Trust (GBTC).

The digital currency investing company only offers its products to an accredited investor, an individual who earns income exceeding $200,000 or $300,000 together with a spouse or has a net worth of $1 million, alone or with a spouse.

Currently, ETHE shares are trading at $57, at a premium of nearly 55% to ETH price, drastically down from June’s premium of 950%.

According to trader and investor Alex Kruger, this development was what “helped ETH higher this morning,” and added, “This is bullish ETH as it reduces the lockup period for ETHE from 12 to 6 months.”

Today, Ether jumped over 3% and is currently trading at $387, pushing its YTD performance to 194%.

Around $390 is where trader Loomdart believes it is not “a bad place to punt an eth short.”

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Author: AnTy

Grayscale’s Trust Shares Are Trading At Huge Premiums, Arcane Research Reports

  • Grayscale Trust shares are currently trading at a ‘huge’ premium showing an increasing demand in crypto across the U.S.
  • In a report by blockchain research firm, Arcane Research, the ballooning monetary and fiscal policies in the U.S. could be the driver to increasing demand in these digital products.

In a report published by Arcane Research on the current state of the institutional crypto investment fund, Grayscale Trust, there is an increasing demand for Bitcoin (BTC) across the U.S. as inflation grows. Throughout 2020, the Fed has undergone several expansionary monetary policies (increasing dollars in the economy), which has forced investors to look towards cryptocurrencies as a barrier against inflation.

Grayscale offers publicly tradable shares with crypto as the underlying asset. Currently, the platform holds over $5 billion in digital assets, which is important as demand from U.S. investors grows. However, these shares are trading at an obscene premium, deviating wildly from actual asset prices. In the past month, Bitcoin, Bitcoin Cash, Litecoin, and Ethereum Trust funds have been trading at a “huge premium.”

The Grayscale Bitcoin Trust (GBTC) holds over $5 billion in assets, roughly 2.3% of the total value of BTC in circulation. Astonishingly, GBTC is trading at a 23% premium compared to BTC’s current price, as demand from retail investors increases. Ethereum Trust (ETHE) holds approx. 1.8% of all ETH in circulation ($873 million AuM), trading at 93.7% premium to the net asset value.

Grayscale’s Litecoin Trust (LTCN) and Bitcoin Cash Trust (BCHG) shares publicly launched three days ago following the April 2018 launch to private accredited investors.

As of Thursday, the LTCN shares were trading at a 753% premium to LTC’s price, with BCHG shares trading at a 351% premium. However, the premium in BCHG has been falling since launch as demand and arbitrage are wiped away from the pair, comparative to LTCN shares.

An Arbitrage That Doesn’t go Away

As mentioned above, such premiums should be arbitraged away. GBTC, for instance, has been trading around 7-40% premiums for the past year, showing a possible broken market. Arcane Research explains the main drivers for these premiums staying out on the market with three main drivers.

First, Grayscale’s products bought by accredited and high net worth clients, are locked up for a period before they are released to the secondary market. On the public market, these investors seek “compensation” for the lockup period.

Second, these funds are the only way U.S. investors can publicly trade cryptocurrencies through their 401k investments. This increases the demand, and hence the price for these assets.

Investors are also safeguarding themselves from the aggressive quantitative easing policies being implemented by the Fed. With an increasing debt-fueled bubble, investors are moving to crypto-assets to prevent the washed value of dollars from the impending inflation.

Finally, a considerable number of these investors may not be aware of the premiums they are paying for hence fueling the prices of the Grayscale Trust shares.

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Author: Lujan Odera

Current Market Structure Reminiscent of Period Preceding Bitcoin’s Historic Bull Run: Grayscale

The gains in the crypto market have digital asset manager Grayscale Investments AUM jumping to $5.8 billion.

In its latest report titled “Valuing Bitcoin” written by Grayscale research director Phil Bonello, he points out that a plethora of blockchain metrics indicate that “the current market structure is reminiscent of early 2016, the period that preceded Bitcoin’s historic bull run.”

On the supply side, never has the current level of Bitcoin ever been owned for more than one year while exchange balances continue to be at their lowest levels since May 2019.

On the demand side, daily active addresses are at its highest level since 2017 with the mining profitability ratio stating it a good buying opportunity. Whale Index, that tracks the number of unique BTC addresses with balances over 1,000 Bitcoin is also near its ATH.

Additionally, in the current environment, Bitcoin has become even “more important than ever.”

In 2020, in order to prop the coronavirus pandemic battered economy, governments introduced ultra-loose monetary policies, printing money faster than ever – QE, and continued to increase the debt which has made the situation worse than 2008 Great Recession.

Source: Grayscale

In this environment, investors are now searching for ways to protect against an ever-expanding monetary supply, and Bitcoin’s limited supply which isn’t controlled by any authority makes it an attractive option. The report states,

“We believe demand for a scarce monetary asset like Bitcoin grows as global monetary inflation accelerates.”

Because bitcoin isn’t a cash-generating asset, traditional investors struggle to assign a fair value to it. As such, in many ways, it is similar to how gold is valued — relative valuation and supply/demand analysis.

In May this year, billionaire investor Paul Tudor Jones in his investment case for bitcoin, which he called an inflation hedge, suggested Bitcoin should have a far higher market capitalization than it currently has. Jones at that time wrote,

“Bitcoin had an overall score nearly 60% of that of financial assets but has a market cap that is 1/1200th of that. It scores 66% of gold as a store of value, but has a market cap that is 1/60th of gold’s outstanding value. Something appears wrong here and my guess is it is the price of Bitcoin.”

According to Grayscale, as the demand for the store of value grows during monetary inflation, Bitcoins’ unique quality of being scarce, makes it well-positioned to be a safe haven.

“Bitcoin continues to command global investor attention, there is scant supply to meet growing demand, and the infrastructure is now in place to satisfy that demand.”

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Author: AnTy

Grayscale Launches Second National TV Commercial to Drive Interest In Digital Assets

Grayscale Investments launches a new digital assets TV commercial ad across top stations on Monday aiming at onboarding no coiners onto the crypto bandwagon. The video, which has since been shared thousands of times across social media, raised different opinions across crypto Twitter similar to its previous #DropGold campaign.

The world’s first institutional-focused digital assets firm, Grayscale, launched its second digital assets ad campaign titled “History of Money” on Monday, following the successful “#DropGold” ad, launched in 2019. The new TV commercial is a half-minute explanation of the history and evolution of money from barter trade, to cowrie shells to Roman gold and copper coins and finally the more recent paper form of money and bonds.

While the ad, featured on CNBC, MSNBC, Fox, and Fox Business, promotes the move to digital assets as the next stage of money, Bitcoin (BTC) is not mentioned in the ad, as was the case in the #DropGold campaign. Instead, a list of digital assets on Grayscale’s Trust including BTC, BCH, ETH and XRP are listed as shown in the image below.

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Grayscale’s Digital Asset Trust options. (Image: Grayscale)

The institutional digital assets firm pitches the ad on their blog as:

“A wakeup call that people everywhere should seize what we feel is a once in a generation opportunity that digital currencies may present.”

Crypto journalist, Andrew Thurman, compares Grayscale’s latest ad to Charlie Merrill, a legendary banker known for his efforts to educate and advertise to the population in a bid to popularize the buying and trading of stocks and bonds.

In 1948, Merrill published one of the longest newspaper ads yet in the New York Times titled “‘What Everybody Ought To Know About This Stock and Bond Business”, to push adoption into equities. His gamble paid off. Could Grayscale’s latest ad play a massive role to push liquidity into the crypto markets as well as increase knowledge across ordinary populations and institutions in a similar manner?

Only time will tell. But so far the institution has grown its value of assets under management (AUM) to over $5 billion according to the recently released half year results.

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Author: Lujan Odera

Grayscale Ethereum Trust Files with SEC to Halve the ETHE Locking Period Same as GBTC

Grayscale Investments has publicly filed a registration statement on Form 10 with the US Securities and Exchange Commission (SEC) on behalf of its Ethereum product, Grayscale Ethereum trust (ETHE).

If approved, it will offer the product a higher SEC status, the same as Grayscale Bitcoin Trust, to become the second digital currency investment vehicle to attain the status of a reporting company by the SEC.

The prominent change will be reducing the unlocking period of ETHE shares from 12 months to 6 months, the same as GBTC. If effective,

“accredited investors who purchased shares in Grayscale Ethereum Trust’s private placement would have an earlier liquidity opportunity, as the statutory holding period would be reduced from twelve months to six months.”

This is a “milestone” for Grayscale Ethereum Trust as even though Bitcoin is the most popular of its products, “Ethereum has gained significant traction and interest over the years.”

Grayscale notes that there is a “strong demand” for access to Ethereum which has grown to become the “largest” Ethereum investment vehicle.

In Q2 2020, Grayscale’s Ethereum Trust hit a weekly investment of $10.4 million in ETHE, amounting to the record quarterly inflows at $135.2 million. Overall, demand for ETHE accounts for nearly 15% of total inflows into Grayscale products this past quarter.

In other news, Grayscale is interested in getting its products on the Robinhood app. A zero commission trading place, Robinhood is popular among millennials that got even more so in 2020 thanks to the lockdown and government’s monetary stimulus to combat the coronavirus pandemic.

However, not everyone thinks it is a good decision, given that Robinhood already allows trading for Bitcoin and Ethereum along with five others including Bitcoin Cash, Bitcoin SV, Ethereum Classic, Litecoin, and Dogecoin.

Also, while ETH is trading on Robinhood at the same price as any spot exchange, ETHE shares are trading at $100.50 at a premium of over 200%. The premium has come down drastically from about 950% in early June 2020, as per Ycharts.

Also, no matter which option users go with, they are not getting the crypto to themselves as while Grayscale has Coinbase Custody to safe keep the digital assets for their users, Robinhood doesn’t support coin withdrawals or transfers of existing cryptos.

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Author: AnTy

Grayscale Receives FINRA Approval to List Bitcoin Cash and Litecoin on The Stock Market

Grayscale Investments’ two more products, Grayscale Bitcoin Cash Trust and Grayscale Litecoin Trust, have received approval from FINRA for public quotations under the ticker BCHG and LTCN on OTC Markets.

With this move, both Bitcoin Cash (BCH) and Litecoin (LTC) will be trading on the public stock market for the first time.

The New York-based digital currency asset manager announced on Monday that regulators had given the go-ahead for the sale of its two products, covering two new cryptos to the public.

The company that makes digital assets available in the form of stocks will make these new productions available to the general public in the next two to four weeks.

Grayscale stocks trade on OTCQX, an over-the-counter (OTC) market that is overseen by regulator FINRA, and here securities do not need to be registered with the SEC.

More options for institutional investors

Grayscale’s crypto products amount to shares in a trust that holds the underlying digital asset.

With this approval, institutional investors are now able to get exposure to these two crypto assets that Grayscale sells in the forms of shares, which, as we have seen in the case of both Bitcoin and Ethereum results in a significant premium to the underlying asset. Grayscale’s managing director, Michael Sonnenshein said,

“Grayscale builds investment products that operate within existing regulatory frameworks. With two additional products gaining approval for public trading, we’re broadening access for investors to gain exposure to the digital currency asset class.”

In its Q2 2020 report, Grayscale shared that it had the largest quarterly inflows ever at $905.8 million. Not only GBTC and ETHE saw record inflows, but Grayscale Litecoin Trust saw its largest inflows to date as well. Also, Grayscale Bitcoin Cash Trust recorded its largest inflows since Q2 2018. The report read,

“After a period of slow growth, Grayscale Bitcoin Cash Trust and Grayscale Litecoin Trust have seen a marked uptick in investor interest. The two trusts combined have now reached over $20 million in inflows since inception.”

With this, the total number of digital assets available to the public as shares have come to six. Already, Grayscale’s bitcoin product has found a special place among millennials investors on apps like Robinhood. Also, a Charles Schwab report from December stated that the Grayscale Bitcoin Trust (GBTC) was one of its top five equities held by millennials, even ahead of Netflix.

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Author: AnTy