Grayscale Investments Leading The Bitcoin Bull Charge

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Grayscale investments

Grayscale Investments Leading The Bitcoin Bull Charge

After a two-week sabbatical, Grayscale Investments opened its doors again on Wednesday and in the two days of operating has added another 4,790 BTC to its Bitcoin Trust (GBTC), worth $184 million at time of writing.

The company’s latest acquisition is more than 265% of the newly mined supply in the same time period, and unsurprisingly the Bitcoin price reacted with a 20% rise before retracing a bit to $38,605.

According to data analysis firm ByBit, Grayscale Investments now holds 611,430 bitcoins in its Bitcoin Trust, worth $23.45 billion, after impressive growth in the last quarter of 2020.

Grayscale Bitcoin Bull

Grayscale Releases Q4 2020 Report

Grayscale has started 2021 the way it behaved throughout the whole of 2020. The company released its latest quarterly report, which confirms the institutional demand for Bitcoin is higher than ever.

During Q4, the total investment into Grayscale products was $3.3 billion, 87% of which was into the Bitcoin Trust (GBTC).

Grayscale also reports that 93% ($3 billion) of its capital inflows is from institutions, emphasizing the demand for Bitcoin from institutions.

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In the same time period, Grayscale bought up 194% of all the newly mined bitcoins, as the average weekly investment for its GBTC product was $217.1 million.

The financial commitment from individual institutions is growing at a rapid rate, too. With an average weekly investment of $2.9 million in Q3, each institution more than doubled their venture with an average of $6.8 million in Q4 into the Bitcoin Trust.

GBTC 2020 Growth Off The Scale

Grayscale Bitcoin Trust (GBTC) started 2020 with $1.8 billion in AUM and ended the year with over $17.5 billion, making it ‘among the fastest growing investment products in the world.’

The value of GBTC rose exponentially, in part down to the rise in the Bitcoin price, but that isn’t the full picture.

Grayscale growth has been outstanding in 2020

Capital inflows into Grayscale products surpassed $5.7 billion in 2020 alone, more than four times the $1.2 billion invested in its Digital Asset products in the combined six years previous.

Grayscale Investments ramped up its investment into Bitcoin last year, especially post Bitcoin Halving, and has been buying more than the newly mined bitcoins since.

According to CoinTelegraph, from the Bitcoin Halving on 11 May to the end of the year Grayscale purchased 224,930 bitcoins. That’s more than 1,200 BTC per day, and more than 130% of the daily mined bitcoins.

This is significant, because miners are the most natural sellers, as they need to cover their costs. Therefore, one company acquiring more bitcoins than the new daily supply in the last 8 months proves the demand for Bitcoin is huge.

There is a supply crisis led by institutional demand for bitcoin

Grayscale Causing The Bitcoin Supply Crisis

2020 was a groundbreaking year for Bitcoin, and Grayscale led the way. With its $1.125 billion investment in Bitcoin, Michael Saylor and MicroStrategy made the biggest headlines of the year.

However, the team at Grayscale “quietly” kept doing what they have always been doing, just at a much faster rate. From $1.8 billion to $17.5 billion in a year is a magnificent rise.

Grayscale even outperformed Bitcoin (BTC) price in the same time period, and the exponential growth of capital inflows proves it is not all down to the appreciation in the Bitcoin price.

With PayPal and Square having to buy large amounts of Bitcoin to meet demand for their Bitcoin services. And with news leaking about eToro exchange having to stop all leverage trades because they can’t get enough BTC to meet demand, it shows there is a real Bitcoin supply crisis.

A crisis in part caused by Grayscale, but one that isn’t affecting the company’s demand for Bitcoin.

Author: Tommy Limpitlaw

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Bitcoin FAQs

What’s the point of Bitcoin?

Bitcoin is a decentralized money. A money that nobody can control or manipulate, and a money that nobody can print and devalue. It’s also not necessary for any third party to verify transactions, so it makes it much faster and cheaper to send value. It’s also money built on the Internet: a society of almost 5 billion people.

Can you lose money with Bitcoin?

You certainly can lose money on Bitcoin. Many new investors see the gains Bitcoin has made, and with social media everyone seems to think they’re professional traders. But the truth is, Bitcoin’s biggest gains have come from buying Bitcoin and holding on long term and riding the market. People expecting only gains, quickly lose faith when it crashes and lose money.

How much should I invest in Bitcoin?

Bitcoin is a new technology, and an asset that is finding its value. It has great potential, but the price is volatile, so investing in it should only be for those who understand it and have faith in it. Make sure you position size with something you’re comfortable with because 10% moves either way are not uncommon.

Can you buy less than 1 Bitcoin?

Yes. Every Bitcoin can broken down into 100 million bits. They are known as satoshis, after the pseudonymous creator Satoshi Nakamoto. And some companies will let you buy as little as $1 worth of Bitcoin, which at time of writing is worth about 11,000 satoshis. There are many companies that have a system for dollar cost averaging (DCA). This is a great way to buy Bitcoin, and is known in the space as ‘Stacking Sats’. Basically, what you do is set up small automatic, recurring payments to buy Bitcoin (or sats), and you DCA over time.