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Interest in cryptocurrency products at Grayscale is not diminishing and it is no longer just about Bitcoin

August 14, 2020

Grayscale Investments, the world’s largest digital asset management company, has seen an exponential increase in investments in its cryptocurrency products. Total assets under management rose $ 1 billion in less than two weeks in July, a Twitter update showed. According to the latest documentation, the number of shares issued in grayscale is also between the first and the The second quarter of 2020 rose 90%.

Given the company announced in its second quarter update that it had raised around $ 900 million for the entire quarter, interest in grayscale products appears to be growing exponentially. At this moment the enterprise obsessed More than $ 5.2 billion worth of cryptocurrencies combined, with Bitcoin leading the way at $ 4.4 billion. In total, the company received $ 1.4 billion in the first half of 2020.

Grayscale

Interest in cryptocurrency products at Grayscale is not diminishing and it is no longer just about BitcoinInterest in cryptocurrency products at Grayscale is not diminishing and it is no longer just about Bitcoin

The level of investment in grayscale funds also exceeds the end of 2017, although the price of Bitcoin is not that high. Usually, This is considered to be one of the best indicators of institutional interest in digital assets as no trading fund has been allowed to enter the Bitcoin market.

The demand isn’t just for Bitcoin

Although Bitcoin is by far the most popular product in the Grayscale family of investment products, Other assets have also grown significantly, with Ether (ETH) being the second-biggest winner. Grayscale recently filed a Form 10 registration statement with the Securities and Exchange Commission for the Grayscale Ethereum Trust, identifying them as an SEC filing firm upon validation.

This shows a growing institutional demand for ethers, which is also manifested in the increasing volume of derivatives. This interest is likely to be due to the increasing activity in the field of decentralized financing (DeFi) and stable coins.

Investors in Grayscale have also shown an interest in diversifying into various cryptocurrencies by investing in the company’s Grayscale Digital Large Cap Fund. The fund is Grayscale’s fourth public offering, offers exposure to multiple crypto assets and is available for stock trading on the OTC market. Rayhaneh Sharif-Askary, Head of Investor Relations at Grayscale, told Cointelegraph:

“In the first half of 2020, Grayscale invested $ 1.4 billion in private placements of its product family. Demand for Altcoins is growing Demand for former Bitcoin trust products from Grayscale has increased by 35% Q-over-Q and 81 % of institutional investors who returned in Q2 20 have now assigned multiple products (up 71% from Q12). “

The Bitcoin Cash and Litecoin stocks are Grayscale’s fifth and sixth public offerings, and recently received approval from the U.S. financial industry regulator to make both funds available for public OTC trading.

Grayscale Premium and Arbitrage

Grayscale’s entries are certainly a signal of institutional interest, but they are also supported by other data sets such as CME’s open interest in Bitcoin futures.Some fear that these inflows could be exacerbated by accredited investors who You use the premium between the base value and the share price of the fund. Michael Sonnenshein, CEO of Grayscale, has Approved Recently, accredited investors could still buy GBTC at the price of Bitcoin:

“Those who ask … YES, the Grayscale # Bitcoin Trust private placement is available to accredited investors who are eligible to buy shares of the Trust’s Daily Net Asset Value. We accept investments in cash and BTC.”

According to Grayscale’s most recent filing with the US Securities and Exchange Commission, the number of shares sold rose 90% from the first through the second quarter of the year. This corresponds to the fund that has issued more than 87 million shares.

It should also be noted that grayscale stocks trade at a volatile premium, and reportedly fell to 10% in July. According to cryptocurrency technology firm Amun AG, investors (likely retailers) bought shares in the Grayscale Bitcoin Trust last year at a price of a Market price 22% higher than the average net asset value. So, The lower premiums could have invited arbitrage traders to buy the shares, suggesting another reason for the high demand for grayscale products.

Lanre Jonathan Ige, a researcher at Amun AG, told Cointelegraph so Rewards exist “due to the inability to create (or redeem) stocks on a daily basis, as in the case of ETPs / ETFs”. He added:

“There is untapped demand for Bitcoin in the US market from those with tax-privileged accounts such as retirement accounts whose only option in BTC (some may not even understand the drastic premium for GBTC) for smart investors can (somehow) generate returns, equivalent to the GBTC premium, knowing that the premium is unlikely to fall, or even hedge exposure to GBTC by reducing it as they create new stocks. “

Institutional trading is recovering

However, the exponential growth in institutional money flowing into Bitcoin and other digital assets can also be observed through other measurements, namely through through derivative activity on the CME and Bakkt futures marketswho recently posted record numbers for open interest and volume.

There are other options for institutional investors everywhere. Lanre Jonathan Ige told Cointelegraph that The lack of viable options is one reason for the mentioned rewards, but new options are appearing::

“People aren’t buying the native asset because many less sophisticated investors are unfamiliar with Coinbase / Kraken and want to invest through brokers they understand and hold the rest of their assets in. GBTC can be accessed through some brokers who have who access to the OTCQX market. Buying Bitcoin through such a wrapper would allow an investor to enjoy many tax benefits in the same way that an investment in the 21Shares ETP pool likely would. “

As Bitcoin continues to establish itself as a more reliable asset class with the public, awareness seems to be paying off. Grayscale promotes institutional education by promoting Bitcoin to financial advisors along with many other strategies. Similarly, Fidelity has also referred to Bitcoin as the Economic Crisis Insurance Plan, and Goldman Sachs recently stated that the price of Bitcoin could rise along with that of gold as the demand for viable stores of value increases.

In addition to promoting cryptocurrency education among financial advisors, Grayscale is also trying to raise awareness of cryptocurrency among the masses after recently launching an advertising campaign on CNBC, MSNBC, FOX and FOX Business to “bring cryptocurrency” to the masses. “ However, the 30-second video ad was heavily criticized by some members of the Bitcoin community for failing to mention Bitcoin and focusing too much on the history of money rather than digital assets. In addition, some also criticized the mention of controversial forks like Ethereum Classic and Bitcoin Cash, and even the quality of the advertising itself.

Amid the ongoing pandemic and a depreciating dollar It’s only a matter of time before we see a bitcoin ETF that could be a real game changer for bitcoinsays Michael Sonnenshein, CEO of Grayscale. Right now, the GBTC fund is closest to an ETF, which if it were an ETF would be one of the most sought-after in the US.

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