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

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

Wilshire Phoenix Keen to Launch New Bitcoin Commodity Trust Pending SEC Approval

  • Wilshire Phoenix to start offering BTC via a new Bitcoin Trust according to their latest SEC filing. The Trust will be offered to a select clientele with a max average of $2 million or 80000 shares. They haven’t experienced a smooth sailing with SEC as their proposed BTC ETF’s were rejected by SEC on several occasions

The Securities and Exchange Commission (SEC) has now revealed that Wilshire Phoenix intends to launch a new BTC Commodity Trust. This was according to a filing they made to the SEC’s pending approval.

The Wilshire Phoenix are in the process of applying for rights to offer Bitcoin to a select group of clients. The trust will accept a max proposed average of 80000 shares equivalent to $2 Million. The trust would enable clients who own Bitcoin a cost-efficient mode by mitigating some policies deemed too harsh in place for digital asset markets.

This will pit them against industry heavy weights, Grayscale Investments armed with a $3.6 billion warchest. Affiliates of the Digital Currency Group, have been in operation since 2013 but have since filed an application to convert the trust into an SEC reporting company.

The application further discloses that the primary custodian of the Bitcoin will be the Fidelity Digital Asset Services with cash deposits being held at the UMB Bank. The cash deposits will be FDIC insured with BTC holdings being insured against theft for up to $100million.

The Administrator of the trust will then be tasked with determining the exact value of the trust on daily basis at 4.00 pm Eastern time. This will be worked out by multiplying the amount of Bitcoin held in the reserve against the current BTC price

Their Latest ETF Bid Rejected by The SEC

Notably, Wilshire Phoenix had their latest Exchange Traded Fund (ETF) bid rejected by the SEC in February. In a 76-page dossier the SEC highlights that the main objection to the ETF bid was that they needed to protect the investors from risky markets and potential market manipulation.

However, Commissioner Hester dubbed crypto mom differed with the ruling. She was especially worried that the SEC was sending the wrong message to potential investors opting for friendlier jurisdictions, as it had rejected Wilshire Phoenix’s ETF bids on multiple occasions. They have rejected over 12 Bitcoin ETF applications over the past 2 years.

Latest Bitcoin Price News and Crypto Market Updates

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Author: Lujan Odera

Will the Price of BTC Surge After the 2020 US Presidential Elections?

Bitcoin bulls are being kept at bay by the U.S 2020 election uncertainty according to Northern Trust Wealth Management CIO, Katie Nixon.

Speaking to MarketWatch, she noted that the crypto markets volatility will increase further between now and the elections. This, coupled with the COVID-19 pandemic and ongoing U.S-China trade war could see BTC struggle below the $10,000 mark for a longer time.

While BTC has suffered under global uncertainty, other assets including traditional safe havens like gold and oil weren’t spared. Oil prices recently hit a 25-year low as demand plummeted amid lockdown measures.

Gold, on the other hand, was a bit resilient, with speculations pointing to a possible $3,000 high in the near future. Following these trends, the crypto market was ultimately affected, but historical data from TradingView now point out to a possible bull-run after the U.S elections.

Source; TradingView

Based on this cycle, BTC appears to have picked up after the 2012 and 2016 U.S elections. Could this mean a repeat of the same as we head into the 2020 elections? With the crypto markets uncertainty, only time can confirm whether the pattern holds water.

Earlier this month, hopes were high following the BTC halving, but the market failed to react adequately. As it stands, Bitcoin has yet to form a stable support level above $10,000 despite the market hype prior to Mays 2020 halving.

Interestingly, this speculation coincides with a theory by Eric Wade, a crypto veteran working with the Stansberry Research Group.

In his recent analysis, Wade noted that BTC is about to experience the next bull market given the new halving. Looking back, the market picked after the 2012 and 2016 BTC halvings. These were both U.S election years, hence the similarity despite different fundamental explanations to the cycle.

At the moment, BTC is trading at $8,855 as per Coinmarketcap stats and continues to dominate the crypto market with a 65% market share. Going by the speculated cycles, this price could comfortably hit the $10,000 mark once the U.S 2020 election is over and the market has fully adjusted to the new 6.25 block reward.

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Author: Edwin Munyui

Major Equity Settlement Firm DTCC Launches New Blockchain And Tokenization Experiments

The major equity clearing and settlement firm, Depository Trust & Clearing Corporation (DTCC), has been experimenting with blockchain technology for over three years, has announced two new projects.

The two projects will be called ‘Ion’ and ‘Whitney’ respectively. Both aim at improving post-trade settlements in the private and public sectors through asset digitization and tokenization, respectively.

Ion will function as a proof-of-concept project: aiming to clarify the use of Distributed Ledger Technology and how it can be leveraged for the digitization of assets.

DTCC’s chief of global operations clearing agency services and client services Murray Pozmanter stated:

“Project Ion is about working with the industry to further the value proposition on accelerated settlement leveraging new capabilities such as DLT and tokenized securities, and to learn how DTCC can best deploy these technologies to deliver additional value to clients and the industry.”

Whitney, meanwhile, specifically targets private markets. Particularly those that are in need of automation but don’t have the infrastructure to do so effectively.

DTCC’s business innovation and managing director – Jennifer Peve – explained how project Whitney could greatly help private markets:

“Project Whitney presents an exciting opportunity to leverage emerging technologies and develop completely new solutions from the ground up.”

DTCC focus on blockchain has been built around ensuring stable transaction settlements via global post-trading standards. The firm is engaged with the industry, actively taking inputs and suggestions to assess the market demand. DTCC currently processes $1.7 quadrillion worth of securities transactions every year.

DTCC is continually looking for new use cases for blockchain technology within the capital market. To do so successfully, it has partnered with blockchain infrastructure providers like IBM and R3 in the past to create new decentralized solutions.

Back in 2017, it launched a proof-of-concept based credit derivative settlement project.

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Author: James W

Edelman Survey: 48% of 34k Global Respondents Trust Crypto; China Tops the List at 81%

The Edelman Trust Barometer comprising of 34,000 online correspondents from 26 different markets suggest that 48% of the surveyed individuals trust cryptocurrency. In contrast, only 35% of them believe it would bring any good to the world.

Out of the total 26 surveyed market, China was the most bullish with 81% of the correspondents showing confidence in the digital asset ecosystem while 62% of these people believe that the blockchain and cryptocurrencies would bring a positive impact in the world.

Chinese market’s significant bullish behavior and confidence in the crypto ecosystem can be attributed to its aggressive blockchain approach where the Prime Minister Xi Jinping made a public announcement for accelerated adoption of the decentralized technology.

The largest populated country was also among the first to set up a research team to develop their CBDC and now are on the verge of a public release once the pilot program comes to an end.

Trust in Crypto Soars in Countries With Financial troubles

China is not the only country taking significant leaps in the percentage of people trusting crypto, in fact. These countries have been going through a financial turmoil like Argentina and Mexico where the rate rose to more than 20% from 2019. Seventeen other countries showed more than a 10% rise from 2019, while five countries registered a 5% rise.

Only Saudi Arabia, the United States and the United Kingdom registered a drop in trust towards the crypto space from 2019. If we look at the overall percentage of all 26 surveyed markets, it rose by 11% from the last year.

Deidre Campbell, global chair of the Financial Services Sector for Edelman noted that the survey was conducted before the COVID-19 pandemic hit the market and that sentiment has only grown stronger as governments around the globe have been on a money printing spree. He explained:

“This research I think shows that crypto is very much increased in the consideration set as an alternative currency, but I think in this [COVID-19] environment we’re starting to see people start to look at crypto, particularly Bitcoin, as a hedge on inflation.”

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Author: James W

DTCC Urges Financial Institutions to Collaborate in Forming A DLT Regulatory Framework

U.S Depository Trust & Clearing Corporation (DTCC) published a white paper on Feb,12 calling for the establishment of a proper regulatory framework on blockchain technology. The leading American financial markets clearing and settlement company noted that this would help avoid the risks associated with Digital Ledger adoption in future.

This white paper dubbed ‘Security of DLT Networks’ highlights the opportunities and looming risks if financial industry stakeholders do not step up to oversee blockchain implementation. DTCC’s Chief Security Officer, Stephen Scharf, further emphasized on the importance of tech policy upgrades;

“DLT offers great potential, but as with any new technology, it also comes with certain risks. Traditional security measures may not be adequate, so it is critically important that this topic is top of mind for any DLT implementation.”

DTCC’s Proposed Strategy on Blockchain Implementation Oversight

According to the whitepaper, financial market players are better off collaborating to form standardized guidelines on DLT adoption. It continues to read that a coordinated approach would help address the security associated risks in detail. This will in turn assist firms operating and looking to enter the blockchain market to play by the book and grow within a regulated framework.

DLT will notably improve how data is protected, verified and processed. As a result, DTCC suggests that a more tech specific framework would be effective in integrating the DLT networks within IT legalities across the world. An industry consortium to form fundamental operational guidelines was also identified as a long-term solution to the existing legal gaps in the DTCC whitepaper.

There have been previous efforts to form a baseline regulatory framework around blockchain tech but only a few jurisdictions have achieved much. DTCC plans to capitalize on its muscle within the derivatives market to lobby as many financial players and develop a standard for DLT frameworks. Mr. Schaff noted on the importance of a global framework for all industry participants;

“As is common in IT security communities, frameworks must be widely available, generally agreed upon, and commonly adopted.” he added “As best practices mature, they can be adopted into a formal framework and used for financial industry participants and regulators alike.”

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Author: James W

Grayscale Investments Bitcoin Trust (GBTC) Becomes The First Registered SEC Reporting Company

Grayscale Investments’ Bitcoin (BTC) Trust is now registered as a Securities and Exchange Commission (SEC) reporting firm.

In May 2015 the trust was the 1st publicly traded BTC investment channel in the over-the-counter market. In November 2019, Grayscale filled with SEC a Form 10 that allows it to make the trust available to investors having restrictions with non-regulated channels. Its Form 10 became effective automatically, sixty days from it’s filing date.

Grayscale Bitcoin Trust is the First SEC Reporting Crypto Investment Vehicle

The shares of the trust, registered under the Exchange Act of 1934, means the GBTC is the first SEC reporting crypto investment vehicle. This means it now has to send quarterly and annually reports to the SEC, also to publish any unscheduled events or changes within the corporation and to send audited statements together with other forms required to the SEC. Under its new status, it has to reduce the accredited investors’ statutory period from 12 to 6 months. The changes will have to take place 90 days after the SEC registration approval, and only if the trust meets the Securities Act’s requirements.

The Fund Was Given Private Placement Exemption from SEC in 2013

In 2013, GBTC was given a private exemption from being registered to SEC, but Grayscale decided on its own it needs to give the fund’s compliance standard a boost for investors to trust it more. This is what the Grayscale’s managing director, Michael Sonnenshein, had to say about it:

“Grayscale voluntarily pursued this designation and will continue to work within existing regulatory frameworks. Today’s announcement should signal to investors that our regulators are willing to engage with our products and our space as a whole.”

GBTC Has Been a Success in 2019

Over the last year, GBTC has been very successful, having more than $471 private placement total inflow, which is twice more than in 2018. Sonnenshein has explained before that it doesn’t want GBTC to become an ETF, even if its products are similar in structure with ETFs and are modeled after the most popular investment ones.

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Author: Oana Ularu

Grayscale Releases November Update For Its Investment Products

The best performing product on November 29 was the Grayscale Bitcoin Trust with a day change of 4.52% followed by the Grayscale Ethereum Classic Trust with an increase of 4.18%.

Grayscale Releases November Update

According to data provided by Grayscale on November 29, all their single asset products experienced gains.

The worst performing product was the Grayscale Stellar Lumens Trust that grew just 1.95%, followed by the Grayscale Litecoin Trust with a growth of only 2.67%.

Other products include the Grayscale Bitcoin Cash Trust with an increase of 3.75%, the Grayscale Ethereum Trust, that grew 3.75%, the Grayscale Horizen Trust, expanding 3.36%, the Grayscale XRP Trust, surging 2.73% and the Grayscale Zcash Trust with an appreciation of 3.75%.

A few weeks ago we wrote that back on November 19, 2018, things were looking very bad for cryptocurrencies.

Indeed, every single product provided by Grayscale was experiencing massive losses with the exception of the XRP Investment Trust that registered an increase of 3.2%.

It is worth mentioning that these losses were related to the fact that the crypto market was experiencing a capitulation. After the Bitcoin Cash (BCH) hard fork on November 15, things turned out to be very negative for Bitcoin (BTC) and all other cryptocurrencies in the market.

Grayscale is a market leader in digital currency investing with a wide range of solutions for investors in the crypto space. The company provides investing and crypto asset management for larger and traditional investors.

The solutions provided by the firm allow many interested parties in gaining exposure to this innovative and exciting market.

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Author: Carl T

Grayscale’s Bitcoin Trust Witnesses A Drop in Price but Still Maintains at AUM 2.4 Billion

Despite experiencing a tough day of low prices, Grayscale’s Bitcoin Trust maintains at $2.23 billion AUM. According to a recent report released by the cryptocurrency investment company dated November 15, its Bitcoin product only suffered a 1.3% change despite the price dropping by over $500.

The price of the Bitcoin Trust has been trading between the range of $8,500 and $9,000 early this week. Despite the minimal volatility in the product, the market was set to witness huge movements. When the Bitcoin trading volumes dropped, investors migrated to other markets. For the first time since October 25, the price of Bitcoin went below $8,500 after falling by 2.1%.

This drop in the price of the top digital asset happened when it traded below its short-term mark of $8,600. Bitcoin has been trading above this mark since October 25 after president Xi Jinping positively commented about the blockchain tech leading to a 40% gain in less than a day.

Grayscale’s Digital Fund, which consists of a variety of digital currencies, among them being Ethereum, Litecoin, Bitcoin, XRP, and Bitcoin Cash, witnessed a 1,15% drop putting the fund’s AUM at $24.2 million.

Bitcoin was not adversely affected like the other digital currencies in terms of its daily change. The GBT only suffered a 1.13% drop when other currencies were dropping by higher percentages. Ethereum, which is the world’s second-largest digital assets by market capitalization with $88.3 million AUM, dropped by 1.7%. Litecoin fell by 2.28% while Ethereum Classic Trust and Bitcoin Cash Trust fell by 2.51% and 2.63%, respectively. XRP dropped by 2.07%.

When other trust funds were dropping, Grayscale Horizen Trust gained immensely by 14.93%, with its AUM holding at $2.2 million.

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Author: Denis Miriti