Grayscale Bitcoin Trust Outperformed Indexes And Has Record-Breaking Year(s) (#GotBitcoin?)
Digital asset management fund Grayscale Investments’ Bitcoin Trust (GBTC) is up almost 300% on the year, data from Morningstar via the Wall Street Journal (WSJ) reveals. Grayscale Bitcoin Trust Outperformed Indexes In First Half Of 2019 (#GotBitcoin?)
As of July 9, the investment instrument is yielding a 296% appreciation YTD — a stratospheric increase as compared with mainstream investments reflected in the S&P 500 (18.7%) and Global Dow (12.9%) over the same time period.
As of the end of June, a WSJ report had indicated that the fund’s dizzying returns had secured its spot as the best-performing fund in the market. The trust purchases bitcoin (BTC) directly and trades its shares on the over-the-counter (OTC) exchange OTCQX, as the report noted at the time.
WSJ further underscored the fact that the fund’s meteoric performance is not unprecedented — during bitcoin’s historic winter 2017 bull run, the GBTC reportedly reflected a 1,391.44% appreciation over the course of the year to date.
Grayscale — which is owned by Digital Currency Group Inc. — revealed to the WSJ that the GBTC’s assets under management as of June 28 had hit $2.56 billion, accounting for the lion’s share of Grayscale’s total $2.69 billion worth of assets.
Those seeking to receive a primary issue of the trust fund must hold accredited investor status and invest a minimum of $50,000 held in shares for at least a year before resale on OTCQX.
Alongside its flagship trust, which launched in September 2018, Grayscale has rolled out a series of single crypto asset funds — among them ethereum classic (ETC), zcash (ZEC) and litecoin (LTC) — as well as diversified offerings, such as its Digital Large Cap Fund.
As a Grayscale report published earlier this year revealed, institutions accounted for 66% of investments, with 88% of new inflows coming into GBTC — a trend the company characterized as the “return of the Bitcoin maximalist.”
Yesterday, the firm announced it was resuming private placement of shares in GBTC, with one share currently representing 0.00097876 BTC.
In May, Grayscale had reported that out of its total $2.1 billion in assets under management, $1.97 billion were in its Bitcoin Trust.
That same month, Grayscale’s research indicated that bitcoin had gained 47% between May 5–31 at a time of intensifying United States-China trade tensions, making it the best-performing asset of the period — in stark contrast to the Chinese yuan’s faltering.
Grayscale: Q3 Saw Record High Inflows, Growing Institutional Interest
Digital asset management giant Grayscale registered over $254 million in total investment into its products in the third quarter of 2019.
In its Digital Asset Investment Report for Q3 2019, Grayscale provided details on the inflows into its products for the period from July 1, 2019 through Sept. 30, 2019.
The third quarter of the year marked the highest demand for the company’s offerings since its establishment, resulting in $254.9 million of inflows. The figure shows a threefold quarter-on-quarter increase, from $84.8 million last quarter.
The quarterly inflows into Grayscale Bitcoin Trust amounted to $171.1 million, wherein July was the month with the highest level of inflows during Q3. As reported in July, Grayscale Bitcoin trust outperformed indices in the first half of 2019, up almost 300% on the year at the time.
Domination of institutional investors
Institutional investors were the major contributors to the company’s products both in Q3 and year-to-date, with 84% and 83% respectively. Worth noting, total investments into Grayscale products from Jan. 1, 2019 through Sept. 30, 2019 amounted to $382.3 million, while the figure over the past 12 months is $412.3 million.
Previously, Grayscale’s director of sales and business development Rayhaneh Sharif-Askary stated that institutional investors are constantly piling into the space in 2019. Sharif-Askary said:
“You know, it’s really funny, I get asked this a lot — there’s this rhetoric in the media about when are institutional investors going to get involved, when are they going to start investing, and it’s so funny because it’s ironic. We see institutional investors invest with us all the time and that’s been the case for a long time now.”
Ahead Of Conquering The Market
On Oct. 14, Grayscale Investments was approved by the United States Financial Industry Regulatory Authority (FINRA) to publicly quote its Grayscale Digital Large Cap Fund on over-the-counter markets. This purportedly enables the first publicly quoted security based on a selection of digital currencies in the U.S.
In August, Cointelegraph reported that Grayscale was going to move almost $3 billion worth of its digital currency holdings to American major crypto wallet provider and exchange Coinbase. Coinbase Custody would then serve as custodian of the underlying assets for the company’s products.
Grayscale: 84% of Q3 Interest Came From Non-Crypto Hedge Funds
Grayscale’s Michael Sonnenshein contends that the asset manager’s recent Form 10 filing with American regulators would be “a milestone” for the crypto industry if it’s approved.
Sonnenshein — managing director at the world’s largest digital asset manager, Grayscale Investments — made his remarks during an interview with CNBC on Nov. 20.
Hedge Funds After Digital Asset Exposure
Earlier this week, Grayscale filed a registration statement on Form 10 for its publicly traded Bitcoin (BTC) fund Grayscale Bitcoin Trust (GBTC) with the United States Securities and Exchange Commission (SEC).
If approved, the trust would become the first cryptocurrency investment vehicle to attain the status of a reporting company by the SEC. In his interview with CNBC, Sonnenshein noted the robust institutional interest in cryptocurrency access products. Even just in Q3 2019, he said:
“84% Of Inflows Were From Non-Crypto Hedge Funds That Want Digital Asset Exposure.”
GBTC has been trading since May 2015 and Sonnenshein noted that “if we just look at the last 3-month trading volume, it’s tripled year-over-year,” regardless of Bitcoin’s performance on the spot markets.
Regarding the significance of the SEC potentially giving the green light to Grayscale’s Form 10 filing, Sonnenshein said:
“You have a lot of companies that want to have exposure to the space, but then you start to ask, who at the company is going to have the keys? Who at the company is going to do the due diligence and the ongoing compliance?”
Aside from compliance benefits, he emphasized the importance of creating a family of products that “look and feel like many of the other instruments these institutions use.”
Halving, Not Institutions, Will Drive Bitcoin’s Price
The takeaway, he suggested, is that if Form 10 is deemed to be effective, we’ll see for the first time “greater access for institutions who need an SEC reporting company to be able to invest” and “quicker liquidity options, so that investors can divulge their holdings after six, as opposed to twelve, months.”
Regarding any potential impact on Bitcoin’s price, Sonnenshein discarded the institutional investor adoption narrative and emphasized instead Bitcoin’s forthcoming halving — and consequent diminishment of supply — as a factor that has historically shown itself to have a positive impact on the asset’s price.
As reported, Grayscale’s regulatory foray follows a record year for the trust, which saw inflows of $254 million in total investment into its products in the third quarter of 2019.
VC Giant Grayscale Investments Reports Record-Breaking Year
Venture capital firm Grayscale Investments banked a stellar 2019 to surpass the $1 billion mark in total investments.
By The Numbers
In a comprehensive eighteen-page report, the firm touted a record Q4 in 2019. It raised $225.5 million into its investment products, lifting the year’s inflow to $607.7 million after back-to-back quarterlies over $225 million, possibly signaling a larger market trend.
71 percent of the year’s inflow sprung from institutional investors. Managing director Michael Sonnenshein told Cointelegraph:
“We saw record-breaking investment into Grayscale’s family of products, illustrating continued demand from investors for digital currency access products and with a majority of investment coming from institutions, it’s clear that we’re experiencing institutional adoption.”
Existing clients amassed 75% of capital raised. 36% of Grayscale clients now use multiple company products. The company saw its client base grow by 24%.
Grayscale Investors Love Bitcoin
Grayscale Bitcoin Trust, which Cointelegraph first reported on last year, led 2019’s investment demand with $471.7 total — $193.8 million of it raised in Q4, another historical high for the New York-based firm.
Signaling a shift among traditional institutions, communications director Marissa Arnold told Cointelegraph, “As the largest digital currency asset manager, we feel that our numbers are indicative of broader market sentiment and institutional flows into digital currency.”
As younger investors continue finding Bitcoin and other digital currencies safer investments, especially as Bitcoin enjoys a slight surge, this may be the case.
Projecting The Larger Crypto Market, Arnold Added:
“The asset class is experiencing increased validation from legacy companies like Fidelity and CME, signaling to institutions and the investment community as a whole that crypto as an asset class is here to stay.”
Grayscale’s Bitcoin Trust Is Now Open To More Investors As SEC Reporting Company
Grayscale Investments’ bid to register its Bitcoin Trust as an Securities and Exchange Commission (SEC) reporting company has succeeded.
The trust became the first publicly-traded bitcoin investment vehicle on an over-the-counter market in May 2015, and Grayscale filed a Form 10 to the SEC in November, opening the trust up to investors currently restricted from participating in non-regulated vehicles. The Form 10 filing was automatically deemed effective 60 days after it was filed.
The trust’s shares are now registered under the Exchange Act of 1934, making the Grayscale Bitcoin Trust the first cryptocurrency investment vehicle to become a reporting company. The trust now has to publicly file its quarterly and annual reports as 10-Qs and 10-Ks with the SEC and publish updates on unscheduled material events and corporate changes.
The new status also reduces the statutory holding period for accredited investors from 12 months to six months.
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