Grayscale calls for “competitive coins”, Old Money watches: Do big institutions only love Bitcoin?

Original title: Grayscale calls orders, Old Money waits and sees

"Large institutions with assets allocated exceeding $5 million only focus on Bitcoin." On January 18, Robert Gutmann, CEO of New York Digital Investment Group (NYDIG), expressed this view in the media, which was refuted by Michael Sonnenshein, CEO of Grayscale.

Sonnenshein believes that most institutional investors will choose Bitcoin when investing in cryptocurrencies for the first time, but we can see that more and more institutional investors are diversifying their choices. He gave the argument that "Grayscale's BCH and ETH trusts have grown significantly compared to 18 months ago."

Public data shows that in the second half of 2020, Grayscale Fund's ETH holdings increased sixfold from US$350 million at the beginning of June to US$2.165 billion; BCH holdings increased 15 times from US$5.29 million to US$83.51 million; LTC holdings increased even more dramatically, from US$940,000 to US$145 million.

ETH, LTC, BCH, which are considered "mainstream" assets in the cryptocurrency world, seem to be difficult to be regarded as "mainstream" by more traditional enterprises and financial industries like Bitcoin. High volatility and concerns about regulation have become obstacles for Old Money.

In October last year, data showed that 15 companies among the world's listed companies were involved in Bitcoin investment or designed related trading products. This includes Grayscale, of course, but these 15 companies are still a small fraction. You know, there are more than 5,400 companies in the Nasdaq market of US stocks.

For the crypto asset circle, Grayscale is the representative of mainstream traditional institutions, but in the sequence of traditional capital and enterprises, Grayscale, which has a heavy position in crypto assets, is still non-mainstream.

Grayscale CEO challenges the saying that “big institutions only look at BTC”

On January 19, Bitcoin once again tested $37,000 before falling back to around $35,000. OKEx's BTC/USD index showed that as of 2 p.m., BTC was trading at $36,331. Five days ago, Bitcoin once again reached $40,000.

The price of Bitcoin has retreated several times in recent times, but it is still a target of attention for large US financial institutions.

In the latest episode of the American financial radio program "The Scoop", Robert Gutmann, CEO of New York Digital Investment Group NYDIG, said that most serious investors he talked to were only interested in the cryptocurrency with the largest market value (BTC). "In a recent conversation, among large institutions with assets of more than 50 million US dollars, when seriously consulting on asset allocation, 100% were related to Bitcoin, and 0% consulted on other crypto assets."

Gutmann also mentioned that the interest of large institutions in Bitcoin is related to the overall macroeconomic background in 2020. He believes that the active monetary policies adopted by central banks in various countries to cope with the economic downturn under the COVID-19 pandemic have highlighted the advantages of Bitcoin, which has a limited total amount, as an alternative reserve asset for companies.

Gutmann's view that "large institutions only focus on Bitcoin" spread on social media and was refuted by Michael Sonnenshein, CEO of the crypto asset trust fund Grayscale.

He responded to a tweet citing Robert Gutmann’s opinion that institutions will allocate funds to assets other than Bitcoin. “Grayscale’s BCH and ETH have grown significantly compared to 18 months ago, which was unexpected.”

In the second half of last year, the value of Grayscale’s ETH holdings increased sixfold

As Michael Sonnenshein stated, in the second half of 2020, Grayscale Fund's ETH holdings increased from US$350 million at the beginning of June to US$2.165 billion, an increase of more than 6 times; BCH holdings increased from US$5.29 million to US$83.51 million, an increase of 15 times; LTC is more objective, Grayscale's holdings of it increased from US$940,000 to US$145 million, a 154-fold increase.

In fact, in addition to BTC, ETH, BCH, LTC and other assets that are regarded as mainstream assets in the currency circle are no longer only on Grayscale's "shelves".

Last November, the US version of Alipay, Paypal, launched a crypto asset trading service, supporting users to purchase four crypto assets, BTC, ETH, LTC and BCH, with legal currency. On December 11, DBS Bank, Singapore’s largest commercial bank, announced the launch of a crypto asset exchange and stated that it would support the trading of four crypto assets, BTC, ETH, XRP and BCH.

The view that "large institutions only focus on Bitcoin" is too absolute, but it is not unreasonable for Robert Gutmann to say that qualified investors are "interested in the cryptocurrency with the largest market value." After all, Bitcoin is the longest-standing, longest-running crypto asset with the largest market value and a long-term upward trend. For traditional investors with large funds, the trend of this target makes them more trustworthy.

Of course, among traditional companies and financial institutions that have heavy holdings in crypto assets, Grayscale is the most active. The assets it manages include not only mainstream assets such as Bitcoin (BTC), Ethereum (ETH), Litecoin (LTC), Bitcoin Cash (BCH), and Ethereum Classic (ETC), but also Zcash (ZEC), Horizon (ZEN), and Stellar (XLM), which are privacy and payment-related assets.

Public data shows that in December last year, ZEC, XLM and ZEN in the Grayscale Trust all increased their holdings. Among them, ZEC increased by 22,906 pieces (+11.89%) per month, with a total holding of 215,606 pieces; ZEN increased by 104,791 pieces (+23.28%) per month, with a total holding of 554,905 pieces; XLM had the largest increase, with an increase of 8,230,287 pieces (+43.46%) in December last year, reaching a total holding of 27,166,204 pieces.

On January 10, Grayscale founder and former CEO Barry Silbert tweeted, "2021 will be the year of privacy, decentralization, and censorship resistance." He listed ZEC and ZEN after this tweet.

Public increase in holdings and the founder's "call" have caused ZEC, ZEN and XLM to rise sharply in the secondary market. Feixiaohao shows that as of 4 pm on January 19, ZEC was temporarily reported at $106.6, an increase of 47% in the past month, ZEN was temporarily reported at $29.2, an increase of 143.9% in the past month, and XLM was temporarily reported at $0.307, an increase of 72.4% in the past month.

Only 15 listed companies invest in or are involved in BTC

Grayscale, Paypal, Micro Strategy, Square Inc, DBS Bank... These companies and financial institutions are probably the pioneers of traditional industries in embracing the wave of the crypto world, but even if they work together, this force is still not great, because more traditional companies and institutions still hold a conservative and cautious attitude towards crypto assets.

High volatility is the first threshold that scares them.

Although public companies such as Micro Strategy and Square Inc. have invested most of their corporate cash reserves in Bitcoin, it is conceivable that cash is still a rigid demand for maintaining the core business of enterprises. Once the crypto assets they invest in fall sharply, their assets will inevitably shrink.

According to Bloomberg, after the price of Bitcoin plummeted 30% last week, Wall Street CFOs are more cautious about putting company funds into Bitcoin. Michael O'Rourke, chief market strategist at JonesTrading, said, "If a company buys financial assets for speculative purposes unrelated to its core business, it will be a red flag for investors." Robert Willens, an adjunct professor at Columbia Business School, said, "After last week's price volatility, investing in Bitcoin with these funds may bring risks that CFOs are unwilling to take. It may be a wise strategy, but if not, it will threaten the survival of a company."

Regulation is another concern for conservative businesses.

In December last year, the U.S. Securities and Exchange Commission (SEC) defined XRP as an "investment contract" and a security, and filed a lawsuit against its issuer, Ripple. Since then, Coinbase, a compliant crypto asset exchange in the United States, has removed XRP from its listing, and Grayscale Fund's trust product list no longer has XRP.

Companies and institutions that dare to try to invest in crypto assets will also face some uncertain changes. Ripple being sued by regulators is only one of them, and there is also the factor of rapid iteration from the market.

Although BCH, ETH, ETC, and LTC will no longer be in trouble for being sued as "securities", their "mainstream status" is being impacted, and it is possible that these currencies listed in the pioneers' "order" lists will be replaced.

Judging from the recent market trends, the rise of new assets such as Polkadot (DOT) and Chainlink (LINK) is leaving LTC and BCH behind in terms of market value.

After Polkadot launched the cross-chain slot auction, staking will increase the demand for DOT. Market supply and demand have been reflected in the price. In the past week, DOT rose from $6.87 to $19.4, an increase of more than 130%.

AIcoin data shows that as of 4 p.m. on January 19, DOT was temporarily reported at $16.66, with a circulating market value of $16.329 billion, ranking fourth in the market value list of the entire market. During the same period, LTC's circulating market value was $10.947 billion, ranking seventh.

BCH is currently trading at $478.7, with a market capitalization of $8.92 billion, ranking ninth.

Another asset that continued to climb the list last year was LINK, the underlying token of Chainlink, which provides oracle solutions. It was still hovering around $4 in early June last year, and broke through $20 in August. As of 4 p.m. on January 19, LINK was temporarily reported at $22.21, with a circulating market value of $8.899 billion, less than $1 billion away from BCH. The two sides are competing for the 8th place in the market value rankings.

In the past, people in the cryptocurrency circle believed that the top ten assets by market value often had mainstream attributes, and people who invested in and held them with real money built a strong consensus for them. However, the constant changes in the "top ten" have also made the "consensus" no longer loyal, and EOS is the most obvious case.

Grayscale Fund's holdings on the 19th

The nine assets held by Grayscale are not all mainstream coins with high market capitalization. These assets have some other commonalities. They have existed in the world of crypto assets for a long time. They are either representatives of blockchain 1.0 and 2.0 such as Bitcoin, Ethereum, and Zcash, or forked coins of these representatives, providing new solutions.

Grayscale's "belief" is also reflected in the holdings of its trust products. According to AICoin data, as of January 19, Grayscale's BTC holdings were the most valuable, exceeding $22.9 billion, followed by ETH, with a holding value of $3.424 billion; LTC and BCH holdings were both worth more than $100 million, and the holdings of the remaining assets were all less than $100 million.

The total size of Grayscale's managed crypto assets has now reached $27 billion. In October last year, another set of data showed that 15 listed companies in the world were involved in Bitcoin investment or designed related trading products, including Grayscale.

However, the number of “15” companies is only a fraction of the global listed companies. There are more than 5,400 companies in the Nasdaq market alone. It can be seen that Bitcoin still has a long way to go before it can enter the vision of traditional enterprises on a large scale, let alone the encrypted assets that rank behind it.

For the crypto asset circle, Grayscale is the representative of mainstream traditional institutions, but in the sequence of traditional capital and enterprises, Grayscale, which has a heavy position in crypto assets, is still non-mainstream.

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