Grayscale purchased 174,000 Litecoins in February, accounting for nearly 80% of the total mining volume

This article comes from Decrypt, original author: Shaurya Malwa

Translator: Odaily Planet Daily Nian Yin Sitang

summary:

- Grayscale purchased more than 174,000 Litecoin (LTC) last month.

- It currently sits on $248 million worth of “digital silver.”

Data from market tool Bybt shows that crypto fund Grayscale Investments has purchased most of the Litecoin mined last month and currently holds more than 1.44 million Litecoin (about US$248.33 million), making it the third largest cryptocurrency in the fund's holdings after Bitcoin and Ethereum.

The company is one of the few services in the U.S. that allows accredited and institutional investors to buy cryptocurrencies. It offers more than nine cryptocurrency-based "trusts" that are available as subscriptions or as tradable shares on the over-the-counter market. While the Grayscale Bitcoin Trust has received the most money from investors, Litecoin seems to have a following as well.

Crypto miners mined more than 201,600 Litecoins in the past 28 days. As supply increased, Grayscale customers bought up most of the new Litecoins. In the past 30 days, Grayscale's Litecoin Trust (LTCN) has acquired 174,900 LTC. (It's worth noting that some customers may have transferred their Litecoins to the trust rather than acquiring more LTC from the market).

According to data provided by tracking service LitecoinBlockHalf, Litecoin blocks are mined approximately every 2.5 minutes, and miners or entities participating in mining are rewarded for spending their computing resources to verify transactions. In order to cover costs and achieve profitability, these miners sell most of these block rewards on the open market.

Current data shows that miners are earning more than 12.5 litecoins from block “rewards.” These figures mean that miners are mining 300 litecoins per hour, 7,200 litecoins per day, which means that a total of 201,600 litecoins were mined in 28 days in February (or 216,000 litecoins in 30 days).

With 174,900 Litecoins entering LTCN, this means that the fund has purchased nearly 80% of all newly mined Litecoins in the past month.

Meanwhile, the high premium paid for Grayscale’s LTCN suggests that demand for Litecoin is staggering. According to the company’s prospectus, each LTCN is worth just $15.70, while the share itself is trading on the open market for $304.99 at press time.

Investors gain exposure to Litecoin through a regulated and secure fund without having to manage private keys, so it is understandable that there is a premium. However, the current LTCN premium rate is already higher than 1842.61%, which is far beyond the premium of any other Grayscale product. As of now, the Grayscale Bitcoin Trust premium rate is 1.82%, the Ethereum Trust premium rate is 5.52%, the Bitcoin Cash premium rate is 602.7%, and the Ethereum Classic Trust premium rate is 63.86%.

On February 26, Grayscale Bitcoin Trust (GBTC) plunged 20% during the week, exceeding Bitcoin's 13% decline. GBTC's once-significant premium over the underlying assets has disappeared, with the closing price on Wednesday 0.7% lower than the underlying assets. Statistics show that this is the first discount since March 2017.

Just one day after shares of the Grayscale Bitcoin Trust (GBTC) first appeared to trade at a discount, the Ethereum Trust (ETHE) also traded at a discount. Skew historical data shows that since 2017, the trust has traded at a premium to the spot price of Ethereum, and the weekly closing price was 5.21% lower than Ethereum. As of Friday's close, the Ethereum Trust was 1.18% lower than the spot price.

An analysis by JPMorgan shows that there may be two factors behind the GBTC premium turning negative. The first reason is that some institutional investors are now selling GBTC to monetize the premium. This selling pressure not only puts downward pressure on GBTC's premium relative to NAV, but also on Bitcoin prices due to GBTC's high flow and important signals. The second reason is the recent launch of a new Bitcoin ETF in Canada. The introduction of a Bitcoin ETF accessible to US investors will weaken GBTC's flow and cause its premium relative to NAV to fall.

Under this premise, the high premium of Litecoin Trust is indeed eye-catching.

OKEx market data shows that LTC is currently trading at 181.77 USDT, with a 24-hour increase of 3.88%.