[Update] Grayscale sold more than 9 million XLM and XRP

Recently, Grayscale's holdings have attracted attention from both inside and outside the industry. According to data disclosed by Grayscale Managing Director Michael Sonnenshein, Grayscale's total assets under management have increased more than 200 times from December 31, 2014 to date.

Grayscale Holdings Statistics (Updated on December 30)

According to the data disclosed by Grayscale on December 30, its Bitcoin Trust holdings are worth $16.161 billion and its Ethereum Trust holdings are worth $2.1084 billion. Yesterday, Grayscale Bitcoin Trust reduced its holdings by 32 BTC and Ethereum Trust by 202 ETH. It is worth noting that yesterday, Grayscale reduced its holdings by 9.74 million XLM and 9.18 million XRP.

Currently, Grayscale holds a total of 607,108 BTC, accounting for 2.89% of the total; a total of 2,937,524 ETH; a total of 239,399 BCH; a total of 1,154,507 LTC; a total of 26,460,490 XRP; a total of 9,192,031 XLM; a total of 12,277,764 ETC; a total of 175,487 ZEC; and a total of 430,234 ZEN.

Data source: Grayscale

According to bybt data, the current price of GBTC per share in the secondary market is US$30.06, and the price per share in the primary market is US$25.29 (the price of buying an equal amount of GBTC shares BTC from the market). The GBTC secondary market has a premium of 18.86% compared to the primary market, which is lower than the previous trading day.

Not only is GBTC currently at a premium in the market, the secondary markets of BCHG, ETHE, ETCG, and LTCN are all at a premium relative to the primary market, with the premium of LTCN being as high as 2963.83%.

Data source: bybt

Grayscale Product Introduction

Grayscale’s current products can be divided into two types: “single asset trust” and “multi-asset portfolio fund”.

There are 9 single-asset trust products in total, namely BTC, BCH, ETH, ETC, Horizen (ZEN), LTC, Stellar lumen (XLM), XRP, and ZEC.

According to data disclosed by Grayscale in the third quarter of 2020, the main users of Grayscale products are institutional investors (81%), followed by qualified investors and family offices (8% each). 57% of the users are from outside the United States.

Source: Grayscale Digital Asset Investment Report Q3 2020

There are two ways for users to participate in the Grayscale Single Asset Trust: "cash" and "physical assets (corresponding cryptocurrency)".

Through cash purchase, Grayscale will hand over the subscription funds to the authorized broker, who will buy BTC spot in the spot market and hand it over to Grayscale. After Grayscale gets the spot, it will deposit it into the custodian Coinbase Custody and issue the equivalent amount of Bitcoin trust shares GBTC to investors at the same time.

In the case of physical BTC issuance, investors hand over their cryptocurrencies to Grayscale, which deposits the Bitcoin in the custodian Coinbase Custody and issues an equal value of trust shares of GBTC to investors.

Will Grayscale create selling pressure on the market?

Grayscale Bitcoin Trust stated in the "Investment Terms" that Grayscale Bitcoin Trust does not support share redemption, which means that once you subscribe to the Bitcoin Trust, you will never be able to exchange it for Bitcoin, and you can only make a profit by selling the GBTC you hold in the secondary market. At the same time, Grayscale's "management fee" will be collected in a "currency-based" manner, which will result in a year-on-year decrease in the BTC represented by each GBTC share (Grayscale charges a 2% management fee each year).

There is a 6-month lock-up period for purchasing Grayscale Trust, which means that the Bitcoin purchased today can only be sold on the market after 6 months (due to the mechanism designed by Grayscale, GBTC can only be sold on the stock market).

Due to Grayscale’s design mechanism, its selling pressure will only occur in the secondary market, that is, the stock market.

Original image source: AICoin

According to AICoin data, Grayscale Bitcoin Trust increased its holdings of 29,402 BTC in June 2020, which means that this month (December) the stock market will have an additional selling pressure of GBTC equivalent to 29,402 BTC. However, Grayscale has increased its holdings of 16,210 BTC in the past week, so in the short term, this batch of unblocked GBTC will not have much impact on the market.

As of now, due to the arbitrage space in the premium of GBTC, it may further stimulate the BTC spot market, but it is still necessary to pay attention to the lifting of the lock-up period of 6 months after a large increase in holdings.

Reference Links:

1. https://twitter.com/Grayscale

2. https://www.theblockbeats.com/news/20518

3. https://www.bybt.com/zh/Grayscale