Grayscale: what it is and how it affects the crypto market
Grayscale is the largest cryptocurrency fund in the world and belongs to the hyperambitious Digital Currency Group (DCG), founded by Barry Silbert in 2015. DCG supports more than 175 blockchain-related companies and is the parent company of Genesis, CoinDesk and, for example, Grayscale Investments.
Grayscale offers market information, investment positions and investment products for the offered digital currencies. 1 One of these funds includes the largest cryptocurrencies, such as Bitcoin and Ethereum.
Like Anycoin Direct, you can invest in cryptocurrency through the Grayscale Fund. Investors can speculate on what will happen to the price of Bitcoin, without having to buy coins. Thus, investors do not need to worry about the safety and storage of digital currency, which is ideal for a novice crypto investor. In addition, Grayscale allows institutional investors to place large orders, unlike centralized exchanges, which often lack liquidity.
Impact on the cryptocurrency market
To become the largest cryptocurrency fund in the world, Grayscale acquired more than 284,000 Bitcoins between June 2020 and February 2021. This is about 127% of all Bitcoins mined during the same period. In total, they now own more than 650,000 PTS. This gives them just over three percent of all Bitcoins that will ever be in circulation.
Logically, the world’s largest cryptocurrency fund also has the world’s largest Bitcoin fund, called the Grayscale Bitcoin Trust (GBTC). With hundreds of thousands of BTC they manage, there is a possibility that they can influence the market. An example of this may take place this month.
Since March 2020, the price of Bitcoin has started to rise. This led to Grayscale selling a lot of GBTC. However, the issued shares of GBTC have a sale lock for six months. This means that the purchased shares cannot be sold for six months.
Last December, due to the massive rebound of Bitcoin, the shares were trading at their intrinsic value. However, since February 18, Grayscale has decided to trade shares at a discount to their internal value. This led to a drop in demand.
All this has led to the issuance of more than a hundred thousand shares in recent months. In the coming months, analysts expect an increase in the number of shares issued. If these shares are repurchased immediately, it could affect the price of Bitcoin. In the world of cryptocurrencies, most cryptocurrencies reflect the price of a crypto asset. If the issue of GBTC shares caused the price change, then, in fact, Grayscale affected the entire cryptocurrency market.
Stay on top
With thirteen different cryptocurrency funds and more than 3% of the total value of Bitcoins, it is safe to say that Grayscale is a key player in the world of cryptocurrencies. Nevertheless, the company is full of ambitions and plans to expand the number of funds in the near future. There are rumors that Grayscale is considering adding coins such as Bancor, Curve, Cyber Network, Polygon, Ren and 0X.
Currently, the company is already a serious factor in the world of cryptography. With the addition of new funds, Grayscale is committed to further expansion, providing a healthy competitive advantage. Grayscale, managed by its parent company DCG, intends to continue to grow as a leader in the digital currency market.