TronWeekly

Crypto World News

You are here: Home / Archives for Grayscale Bitcoin Trust

Grayscale Bitcoin Trust

As Bitcoin’s Record Highs, Long-Term Holders Drive $2.6B Daily Profit Surge

by

Bitcoin’s price just doesn’t want to stop climbing. The leading digital currency shot past $73,000 recently, hitting another new all-time high price. But as Bitcoin keeps setting records, some of the investors who’ve been holding it for years are deciding to cash out at these lofty levels.

image 87

Blockchain data analysts at Glassnode found that around $2.6 billion in Bitcoin profits are being taken daily right now. A huge portion of those profits are being realized by long-term investors – folks who’ve owned Bitcoin for a long time and held on through all the price ups and downs over the years.

This isn’t the first time something like this has happened in BTC’s history. Past rallies that sent prices skyrocketing also saw similar behaviors from long-term holders. As prices blast into levels never seen before, the investors who’ve been patiently holding their BTC for years start selling some of it to people looking to buy in at the top. It’s like a transfer of crypto wealth from the hands of seasoned investors to fresh money trying to ride the wave.

Around 1 million bitcoins changed hands recently in the price range between $61,200 on the lower end up to the new record high of $73,200. That massive number represents BTC assigned updated valuations in that range as they swapped owners. Analysts estimate about 40% of the $2.6 billion daily profit total comes from entities like the Grayscale Bitcoin Trust cashing out some of their long-term holdings.

image 88

Normal Operating Procedure During Bitcoin Frenzies

This cycle is pretty typical based on what’s happened after previous Bitcoin bull runs. Once prices go vertical, the early buyers who took a risk stacking BTC years ago start selling portions of their stash at huge profits. The new buyers jumping in are gladly paying premium prices, perpetuating the frenzy higher.

While it may seem alarming to some to see so many coins being sold, this type of distribution has been a normal operating procedure when Bitcoin goes parabolic. This distribution from old, aged investor wallets to fresh capital entering is simply the normal cycle when speculative mania takes over. As crypto goes even more mainstream, these wild price cycles will likely become even crazier.

Related Reading | Massive Dogecoin Transfer: 250M DOGE Flees Robinhood

Bitcoin Investors From 2021 Bull Run Inch Closer To Break-Even

by

According to CryptoQuant Founder and crypto analyst Ki Young Ju, at last, Bitcoin holders who have bought during the 2021 bull market, are at their break-even points. Referring to the fact that BTC is once again above $48,000 in a recent X post, Young Ju noted that these investors are now closer to being back in the green after nearly three grueling years.

Young Ju congratulated those holders with “diamond hands” for having been able to hold to their positions throughout this extended bear market and period of capitulation. Now, loyalty and belief in Bitcoin might start paying off.

A recent analysis appears to affirm that BTC is in the course of a bull market and that it is moving to propose that the cryptocurrency seems to be in the course of a shift toward a new bull market. The analysis looked at BTC long-term holders’ trends targeting the “Supply Last Active” (SLA) 1+ year cohort.

image 47

This cohort has been the cohort of BTC accumulation within a year or more. These are the true believers in the asset’s long-term trajectory. The SLA 1+ year supply hit the level of 71% in November 2022. This actually shows how this cohort was aggressively lapping up Bitcoin in that bear market. And as prices start rising, these steadfast holders tend to take profits.

The SLA 1+ year supply had just dropped most recently to 69.2%, with BTC crossing above $46,000. Historically, a declining SLA supply has preceded massive bull runs as long-term holders’ selling has provided the rocket fuel for further gains. The continuation of the trend, the analysis says, would mean that a huge upside can be foreseen ahead. Close monitoring of the activity of these holders is seen as potential valuable input on where Bitcoin prices can head next.

Bitcoin: Bullish Price Targets

Young Ju has himself set a bullish price target for Bitcoin at $112,000 in 2023. He believes this will be driven mainly by the spot ETF inflow, estimated to be around $9.5 billion a month, which could translate into significant increases in Bitcoin realized capitalization across the year.

In fact, Young Ju assumes continued outflows from Grayscale Bitcoin Trust and therefore said that, in his view, Bitcoin could reach $104,000 to $112,000 by December 2023, depending on the maintained ratio between the market and realized values of Bitcoin.

Related Reading | Ethereum Poised For Scalability Boost With Dencun Upgrade & Edolus Release

Grayscale Engages SEC In Key Talks: Fuels Hope For Spot Bitcoin ETFs

by

Grayscale Bitcoin Trust (GBTC) reportedly held a meeting with the Securities and Exchange Commission’s (SEC) Division of Trading and Markets. The division is responsible for evaluating and deciding on Rule 19b-4 applications, crucial for the listing and trading such ETFs.

Bloomberg analyst James Seyffart shared insights on the meeting via a Twitter thread, revealing that Grayscale engaged with the SEC’s Division of Trading and Markets to discuss potential listing matters related to the Grayscale Bitcoin Trust (GBTC). Seyffart also mentioned hearing about other potential Bitcoin spot ETF issuers having meetings with the SEC over the past week.

Seyffart highlighted the Transfer Agent agreement between Grayscale and the Bank of New York Mellon (BNY Mellon) in a recent 8K filing by GBTC. According to Seyffart, this agreement was expected and may not provide insights into the timing of the ETF approval process. Scott, who brought attention to the agreement, is noted for his comprehensive awareness of market developments.

Addressing the probability of SEC approval by January 10th, Seyffart expressed confidence, stating that recent events have not altered his and Eric Balchunas’s (Senior ETF Analyst for Bloomberg) odds, which are capped at 90%. Despite this, Seyffart emphasized that progress is continuing, indicating positive momentum.

Grayscale’s Ongoing Efforts

Nevertheless, the SEC’s memo revealed that the meeting centered around NYSE Arca, Inc.’s proposed rule change to list and trade shares of the Grayscale Bitcoin Trust under NYSE Arca Rule 8.201-E. Grayscale’s filing of a new registration statement last month marked its latest attempt to transform the trust into a spot Bitcoin ETF. A D.C. circuit court mandate issued in August directed the SEC to re-review the application.

image 75 12

In a notable development, Grayscale and BNY Mellon agreed last week to have BNY Mellon serve as the transfer agent for GBTC shares. GBTC plans to list the shares on NYSE Arca under the symbol GBTC and issue the shares continuously upon approval of its S-3 form and a separate 19b-4 filing from NYSE Arca, as per the S-3 filing submitted on October 19th.

However, the race for spot Bitcoin ETF approval extends beyond Grayscale, with major asset managers such as BlackRock and Fidelity also seeking SEC approval for similar products. SEC Chair Gary Gensler confirmed last month that the regulator is actively reviewing these filings, underscoring the growing interest and anticipation in the cryptocurrency market regarding the approval of spot Bitcoin ETFs.

Related Reading | Crypto Currents: A Surge of $176M Flows in 8th Straight Week, Led by Bitcoin & Altcoins

Grayscale Bitcoin Trust (GBTC) Soars Gains 137% Amid Discount Contraction 

by

In a remarkable turn of events, Grayscale’s Bitcoin Trust (GBTC) has become the talk of the cryptocurrency town as traders who seized the opportunity during its darkest days are now reaping substantial profits. The discount between GBTC’s share price and underlying Bitcoin holdings has steadily shrunk, catapulting the trust’s shares to new heights.

On Thursday’s market open, GBTC shares surged to $19.71, a remarkable 137% jump from last year’s December low of $8.29. During this time, GBTC traded at an unprecedented 50% discount compared to its Bitcoin holdings, an unparalleled price gap noted by Ycharts. GBTC outpaced Bitcoin’s gains, rising 48% from $17,800 to $26,300.

Grayscale’s Bitcoin Trust, managing a substantial $17 billion asset, offers investors a unique pathway into Bitcoin via security-backed shares. Each GBTC share symbolizes ownership of a fractional Bitcoin worth 0.00090084 of a full coin, amounting to $24.49 at market opening. Yet, owing to the trust’s structural limitations, shares have consistently traded at a discount since February 2021. GBTC’s 692 million outstanding shares collectively amounted to $13.6 billion, or $19.71 per share, falling short of the trust’s Net asset value of $23.73.

GBTC Discount Battle And Redemption Hopes

GBTC’s status as a closed-end fund restricts the easy conversion of shares into Bitcoin, leading to price discrepancies as supply and demand dynamics fluctuate. The discount widened significantly after the collapse of the cryptocurrency exchange FTX last year and a subsequent decline in digital asset prices. At its lowest point, a GBTC share represented just $16.22 worth of Bitcoin while trading at $8.29, per Grayscale’s official website.

The long-awaited redemption mechanism that could erase this discount may finally be within reach if the Securities and Exchange Commission (SEC) grants Grayscale’s request to convert GBTC into a spot Bitcoin ETF, an ambition the firm has pursued for years. Last June, Grayscale took the SEC to court after denying its initial application. Still, the recent courtroom victory that compelled the SEC to reconsider has resulted in a discount reduction of under 20%.

The discount began to shrink earlier this year during the hearings of the now-decided lawsuit, contracting from 46% to 34% on March 8 as the judges showed increasing scrutiny of the SEC. Since then, the discount has continued to narrow. With experts from Bloomberg’s ETF team, Eric Balchunas and James Seyffart, giving it a 75% chance of approval this year, the prospect of a spot Bitcoin ETF has garnered substantial optimism.

Notably, a similar trend in discount reduction was observed when BlackRock, one of the world’s largest asset managers, expressed its intentions to establish a spot Bitcoin ETF. Although the discount had widened to around 41% on June 15, it quickly reverted to 34% the following week. The cryptocurrency community now watches eagerly as GBTC inches closer to potentially closing the discount gap and revolutionizing the landscape of Bitcoin investment.

Related Reading:| Bitcoin Rally Continues: Analysts Present Bullish Predictions Amid Greyscale’s Victory

Grayscale CEO Believes SEC Leashing Crypto Hampers Its Growth

by

Undoubtedly, US regulators have taken steps to safeguard bitcoin investors. But lately, a lot of red flags have been raised by neighborhood residents. There were rumors that something “huge” would be announced when the Department of Justice first said it would “announce a major, international cryptocurrency enforcement action.”

That wasn’t the case, though. Community members were incensed by the government’s action against the less well-known cryptocurrency exchange Bitzlato. In fact, some openly questioned whether the most recent event was intended to divert attention from the fact that they had no reason to suspect anything about FTX.

Grayscale CEO Highlights SEC’s Regulation Repercussions

Even established members of the group began sharing their perspectives about the matter, apart from the community. Grayscale executive Michael Sonnenshein criticized the SEC’s “one-dimensional approach of regulation by enforcement” in a letter to the Wall Street Journal.

He agreed with the claim that the SEC had been “late to the game” when it came to regulating the cryptocurrency market. The CEO of Grayscale also stated that the SEC should “certainly try” to get rid of dishonest people. However, he emphasized that it shouldn’t be done “at the expense of efforts to develop appropriate regulation.”

Outlining the effects and demonstrating how it has impeded the industry’s expansion, he remarked,

“The SEC’s inaction has prevented Bitcoin’s advancement into the US regulatory perimeter, often forcing U.S investors offshore with less protection and oversight… We are seeing the consequences of the SEC’s priorities play out in real-time—at the expense of U.S. investors.” 

Grayscale filed a lawsuit against the SEC in the middle of 2022 after it rejected its request to convert its Bitcoin trust into a spot-based Exchange Traded Fund.

Grayscale submitted documents to the SEC in October of last year in order to turn its Bitcoin Trust into an ETF. Following several extensions, the regulatory agency on Wednesday issued a rejection decision. Likewise, Grayscale’s application did not address the regulator’s concerns regarding how it would guard against market manipulation and safeguard the interests of investors and the general public.

Grayscale decided to quickly traverse legal waters when the rejection order was issued. The CEO of Grayscale, Michael Sonnenshein, announced on Twitter that a lawsuit had been filed to contest the SEC’s judgment.

Here’s Why Grayscale is Being Sued For Allegedly Mismanaging Its GBTC

by

Grayscale Investments is the target of a lawsuit brought by hedge fund Fir Tree. To look into “possible mismanagement and conflicts of interest” at its $10.7 billion Bitcoin fund, it is requesting information. The information sought might be used to compel the firm to alter how its flagship Bitcoin Trust—GBTC—is managed.

According to a recent Bloomberg report,

“Fir Tree, which manages $3 billion, wants to use the information to push Grayscale to erase the discount by lowering fees and resuming redemptions, said people familiar with the hedge fund’s plans. The trust has roughly 850,000 retail investors who have been “harmed by Grayscale’s shareholder-unfriendly actions,” the firm said in the complaint.”

Grayscale’s Redemption Bar “Self-Imposed”

Grayscale’s redemption bar, which dates to 2014, was allegedly “self-imposed,” according to Fir Tree. It further stated that the trust could permit investors to withdraw their money without obstruction under the law. However, the firm has stated in regulatory filings that it is unable to provide an “ongoing redemption program.”

The hedge fund further claimed that Grayscale resisted share redemption since doing so would reduce profits. The corporation allegedly sold “an incredible number” of additional shares between 2018 and 2021, according to the lawsuit. It imposed a 2% fee, higher than its rivals, on the market value of its Bitcoin holdings rather than the lower share market price. The firm received $615.4 million in fees last year, according to Fir Tree.

Grayscale’s attempts to turn the trust into an ETF must also be stopped, according to Fir Tree. The firm has often asserted that this is the only method company can legitimately redeem shares. According to a statement sent to Bloomberg by a Grayscale spokesperson through email,

“In 2013, we launched Grayscale Bitcoin Trust (GBTC) to provide investors with access to Bitcoin, and always with the intention of converting it to an ETF when permitted by US regulators. We remain 100% committed to converting GBTC to an ETF, as we strongly believe this is the best long-term product structure for GBTC and its shareholders.”

Since late February, GBTC shares have been trading at a discount. The discount gap was as wide as 43.04% at the time of publication.

Screenshot 213
Source: Y Charts

3 reasons why Bitcoin [BTC] can rebound despite dull market conditions

by

Bitcoin [BTC] underwent a swift recovery, after topping out a little below $40k. The ongoing downside price action has left the investors concerned.

The latest side-way movement of price had taken shape since the dramatic fall in May and has extended to the new quarter as well. The drop was so damaging that it ended the winning streak for the digital asset which witnessed its prices surge above $60,000 for the first time in its decade-long history.

However, this trend could potentially come to an end as institutional players could soon push the asset’s price higher. Here are three reasons why a potential uptrend could be right in the inkling:

Institutional players’ comeback

One of the major recurring narratives for Bitcoin has undoubtedly been the Institutional adoption for both 2020 and 2021. While the entry of these players boosted the price of the token, after Tesla’s latest actions, institutional adoption seems to have taken a hit considerably.

But according to a key member of the crypto-analytic platform, Santiment, the price of the king coin can potentially continue to range until mid-July this year, before the institutional players in the market drive the new BTC resistance level up to $40k. The analysis also read,

“When you are enjoying yourself in the rain [especially when you were a child]. You lose track of all time. Bitcoin price is experiencing the same thing for this month.”

btc
3 reasons why Bitcoin [BTC] can rebound despite dull market conditions 8

June-December 2019 Resemblance

The resemblance of Bitcoin’s current price action to that of June-December 2019 is uncanny. In fact, the flagship crypto-asset had surged all the way above the $14k in the last week of June 2019. Shortly after which it spiraled down as FUD entered the market in the form of Bitcoin Cash [BCH] hard fork, the then US President Donal Trump’s take on the token among other news.

BTC2
3 reasons why Bitcoin [BTC] can rebound despite dull market conditions 9

Six months later, Bitcoin slashed over half of its gains and turned down to $6.5k. As a result of the decline, the charts saw death cross formation. However, as bulls bought the dips, Bitcoin recovered and slowly formed lower highs surging briefly to $10k.

Coming down to the present scenario, the latest trend could suggest a similar profit-taking phase, and a period of FUD that was sparked by Elon Musk’s announcement, China’s clampdown on cryptocurrency activities, etc.,

Grayscale Bitcoin Trust

Many well-known cryptocurrency analysts are of the opinion that the Bitcoin market could get a lift in July from the expiration of investor restrictions on the sale of shares in the Grayscale Bitcoin Trust [GBTC], and not downward pressure as earlier reported by JPMorgan strategists.

One of the main possibilities that some market speculators see is the foray investors to the coin market to buy BTC and repay crypt loans used for the purpose of financing their original purchases of the GBTC shares. Meaning, that while selling GBTC shares does not eliminate the risks of deeper discounts that could potentially ward off capital inflow, but, this adversary can be compensated by the repurchases of the cryptocurrency in the spot market.

Along the same line, Amber Group, the digital asset service provider tweeted,

“Lots of bearish chatter around GBTC unlocks whilst conveniently ignoring that in-kind subscriptions funded by debt will ultimately translate into spot buying,”

Grayscale Total Assets Under Management Reaches $50 Billion

by

Investment giant, Grayscale has reached a new milestone of $50.6 billion in cryptocurrency assets under management [AUM] on the 14th of April. The AUM figure has been quite impressive, increasing by an incredible 2,400% from a mere $2 billion at the beginning of 2020.

The Grayscale Bitcoin Trust [GBTC] continued to dominate the charts and accounted for a whopping $41.44 billion, while the Ethereum Trust [ETHE] trailed behind with $7.42 billion followed by the remaining trusts, including Litecoin trust [LTCN], Ethereum Classic Trust [ETCG], and Bitcoin Cash [BCHG], with $405.5 million, $267.4 million and $234.3 million respectively.

Grayscale has witnessed a rise in its total AUM figure by over $3 billion right after its plan to further diversify its crypto-trust offerings that involved the addition of five new tokens for their eligible accredited investors.

Grayscale Bitcoin Fund [GBTC] Vs GLD fund 

With the latest surge, the asset manager is inching closer to the largest Commodities ETF, the SPDR Gold Trust GLD which has $57.70 billion in assets. And there are certain industry experts that speculated this could happen soon. Senior Commodity Strategist, Mike McGlone, for one, believes that the firm’s Bitcoin Trust would eventually overtake the most popular gold-pegged ETF SPDR Gold Trust [GLD] in the coming days. His tweet read,

“Bitcoin Trust on Track to Surpass World’s Largest Commodity ETF – In a world going digital, we believe gold symbolizes the diminishing potential for sustained commodity-price advances, notably vs. Bitcoin. The crypto is a prime example of how advancing innovation suppresses.”

tweet
Grayscale Total Assets Under Management Reaches $50 Billion 11

Grayscale had announced its plans of converting its main product GBTC into an ETF. Hence, if approved, this would make the platform accessible to an even wider section of investors at a much lower cost. While the SEC is yet to give a green light to such an investment offering, but if approved Grayscale would easily become the second-largest commodity ETF just behind the SPDR Gold Shares.

The world’s largest cryptocurrency has surfaced as the growing choice of market participants around the world. This, in turn, prompted North American regulators to approve a few Bitcoin ETFs. As opposed to the Bitcoin’s bull season, Gold, on the other hand, has continued its downtrend starting after the first quarter of 2020.

Miller Value Fund Files With SEC To Buy Bitcoin Via GBTC Trust Fund

by

Bitcoin’s adoption is rising and several new institutions are jumping the bandwagon to reap profits out of the world’s flagship cryptocurrency. BTC Trusts have become wildly popular as it paved the way to ride the growth of the crypto markets by gaining indirect exposure to the crypto-asset.

In the latest development, the asset management fund, Miller Value Fund is all set to enter the cryptocurrency realm.

According to reports, Bill Miller’s investment trust has filed with the US Securities and Exchange Commission [SEC] seeking investment exposure to BTC indirectly by investing in the Grayscale Bitcoin Trust.

The company’s official filing, which was released this week, entailed extensive discussions on the cryptocurrency and also stated that their ‘Opportunity Trust Fund’ is getting into BTC.

The edit explained

“The Fund may seek investment exposure to BTC indirectly by investing in the Grayscale Bitcoin Trust, an entity that holds BTC. Grayscale Bitcoin Trust is a privately offered investment vehicle, the shares of which are also available over-the-counter. BTC is a digital commodity that is not issued by a government, bank, or central organization.”

The official filing also disclosed that the firm is looking for a 15% exposure via the GBTC trust fund and would stop purchasing once the said cap is reached. Noting the same, Ben Miller’s Trust further detailed,

“BTC has no physical existence beyond the record of transactions on the Blockchain. The Grayscale Bitcoin Trust invests principally in bitcoin. The Fund will not make any additional investments in the Grayscale Bitcoin Trust if, as a result of the investment, its aggregate investment in bitcoin exposure would be more than 15% of its assets at the time of investment.”

A quick primer: The Miller Value Partners has $3.5 billion in assets under management [AUM] is essentially operated by Bill Miller, a veteran investor and asset manager.

Miller has been a BTC investor for quite some time now. The news came hours before he penned down a letter touting the premier cryptocurrency as a growing investment. However, the latest announcement will be the company’s first tryst at managing a BTC portfolio for a publically traded fund.

Bitcoin’s Red-hot Rally Comes To Halt; What’s Next?

by

Cryptocurrency proponents anticipated Bitcoin to reclaim its fort above $40,000. However, the crypto-asset has been facing quite a stiff resistance at this level. Despite many in the community, counting for the token to bounce back, it has now entered a consolidation phase preceding a few major dips.

So what is holding back the uptrend?

Bitcoin Under Institutional Exhaustion?

Reportedly, the momentum of flows into the $20 billion Grayscale Bitcoin Trust [GBTC] have topped up when four-week rolling averages are taken into consideration. Over the past two weeks, the fund took a plunge of more than 20% through the 22nd of January, which coincided with the significant double-digit pullback in BTC’s price.

The JPMorgan strategists led by Nikolaos Panigirtzoglou stated,

“At the moment, the institutional flow impulse behind the Grayscale Bitcoin Trust is not strong enough for Bitcoin to break out above $40,000.”

The strategists also went on to add that “risk is that momentum traders will continue to unwind BTC futures positions.” Despite the growing uncertainty, it can be safely said that Bitcoin’s latest rally is in no way similar to the 2017 mania that preceded a massive collapse.

Furthermore, data compiled by the crypto-analytics platform, Skew, revealed that the coin’s realized volatility has hit levels as high as March 2020. So what does this mean?

Bitcoin
Bitcoin's Red-hot Rally Comes To Halt; What's Next? 13

During bull runs such as this, price fluctuations involved with BTC are more normal. This is due to the fact that market participants often tend to cash out at different points. Hence, greater volatility in the crypto-asset’s value essentially means more the extent of the deviation from its average price something that is to be expected during the bull run.

It is also important to note that overall the volatility of Bitcoin has gone down significantly while its price and market cap risen over time. If this trend continues, it can be a much-needed respite for the investors who witnessed massive FUDs and selling spark erratic price movements.

Despite the cooling off institutional momentum, Raoul Pal, founder of Real Vision, predicted

“Feels like BTC is getting ready to climb the wall of FUD fear. Positive seasonality and a nice wedge give it a good chance to hit $50k by March.”