Digital Assets: Grayscale’s Bitcoin Trust is Mopping up Bitcoin

May 20, 2020 | Digital Assets
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The Trust bought a third of all newly-mined bitcoin over the last three months.

The Grayscale Bitcoin Trust (OTCMKTS: GBTC) is amassing bitcoin on an impressive scale. The trust, which is heavily patronised by institutions, added 60,762 bitcoin to its stocks between February 7 and May 17. That works out to a daily average acquisition of 607 bitcoin during those 100 days. (Bitcoin.com)

Two factors appear to have combined to trigger the aggressive buying by the Grayscale Bitcoin Trust – the bitcoin halving scheduled for May 12, and the economic havoc from the COVID-19 pandemic resulting in a massive stimulus globally in fiat currencies.

Grayscale Bitcoin Trust buying statistics

While the trust added over 60,000 bitcoin over the 100 day period, about 34% of these purchases took place in a span of 17 days when bitcoin made a dash for the psychological $ 10,000 mark.

What is significant however is that the trust scooped up about 33-34% of all the bitcoins mined during the three-month period. Bitcoin.com quoted the statistics from a post by a Reddit researcher here.

“And GBTC is just one of the many ETF’s that people who don’t want to fiddle with private keys etc, can use to acquire Bitcoin, albeit the largest one,” the researcher said. “The demand is there. The supply is reduced. Let’s see where we will be in 100 days.”

Investors in the Grayscale Bitcoin Trust do not themselves hold any bitcoin. The trust holds it for them, much like an ETF.

Asset manager Grayscale Investments reports the strongest quarter in its history

Last month, the asset manager reported an extremely strong showing for the first quarter of 2020, with AUM touching $2.2 billion.

Highlights of Q1 2020:

  • Total Investment into Grayscale Products: $503.7 million
  • The average Weekly Investment – All Products: $38.7 million
  • Average Weekly Investment – Grayscale Bitcoin Trust: $29.9 million
  • The average Weekly Investment – Grayscale Ethereum Trust: $8.5 million
  • Average Weekly Investment – Grayscale Products ex Bitcoin Trust: $8.8 million

The quarter marked the largest quarterly raising in Grayscale’s history. The Grayscale Bitcoin Trust and Grayscale Ethereum Trust both experienced record quarterly inflows of $388.9 million and $110.0 million, respectively.

The numbers show “strong and sustained evidence that investors are increasing their digital asset exposure at current levels,” the quarterly report said.

The report revealed that 88% of the quarterly inflows were accounted by institutional investors, the overwhelming majority of which were hedge funds.

Related Story:  Grayscale Bitcoin Trust to Add SEC Legitimacy: Files Form 10 (It’s Not an ETF)

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