Given the rate at which Grayscale bought bitcoin, it might seem that this fund is trying to buy out any existing BTC. However, Grayscale stopped buying three weeks ago.
Grayscale Bitcoin Trust Fund (GBTC), fills out Form 8-K with the Securities and Exchange Commission (SEC) weekly, declaring its recent cryptocurrency purchases. The last time such a report was submitted on June 25, when the company disclosed the purchase of almost 20,000 BTC. In the second quarter, the GBTC invested an average of $ 57.8 million per week.
Grayscale spokesman told Cointelegraph that the suspension of BTC purchases is temporary and results from a quiet administrative period:
“We had an administrative, quiet time at the Grayscale Bitcoin Trust. The fund is now open and you can subscribe from Friday, July 10 at 16:00 ET. “
In any case, Grayscale has not made any new cryptocurrency purchases since then.
Grayscale shows that institutions are interested in bitcoin
It should be noted that GBTC is not a hedge fund that buys assets and expects to use them later. Instead, it buys bitcoin every time investors buy its shares. Currently, each share corresponds to 0.00095891 BTC.
In the second quarter, 84% of investments in Grayscale came from institutional investors, mostly hedge funds. This reversal is therefore indicative of an institutional interest in bitcoin. The company itself boasted about its activity and bought more bitcoins than was mined.
After halving in May, in Q2 2020, inflows to the Grayscale Bitcoin Trust exceeded the number of newly mined Bitcoins in the same period. With such a large influx to the Grayscale Bitcoin Trust over newly mined Bitcoins, there is a significant reduction in supply-side pressure, which could be a positive signal for the appreciation of the Bitcoin price. “
Why did institutional investors stop buying?
There are at least several possible explanations for this sudden withdrawal of institutional investors. One of them is seasonality – July is usually a quiet period for investment activity. Many asset managers travel or take leave.
Another reason may be that Bitcoin has not seen any particular changes in the past few months. While its rapid recovery after the March low point caught the attention of investors who were concerned about the pandemic and government-printed money, since early May, bitcoin has entered a stagnant market with a price of $ 9,000-9,500.