Which institutions liquidated their GBTC positions in Grayscale?

As a weather vane of the crypto market, changes in Grayscale's holdings have become a must-read data in the cryptocurrency circle every day. The increase in holdings is seen as a bullish signal and is interpreted by the market as continued entry of institutions.

Due to the restrictions of non-redeemable and locked positions, the market has created an illusion that "the institutions behind Grayscale only buy and do not sell." However, institutions do not always hold positions.

For example, the first ETF that bought GBTC sold GBTC twice recently, and BTC fell by thousands of dollars the next day.

So, which institutions sold their GBTC holdings?

Who is selling GBTC?

According to the rules of the US stock market, institutional investors will announce their holdings every quarter (publishing 13F reports). Of course, they can also apply to conceal part of their holdings to prevent plagiarism. Since the latest data is only updated to the third quarter, Rhythm is temporarily unable to learn about the latest GBTC trading situation of institutions. After the fourth quarter data is updated, Rhythm will also bring you first-hand news in a timely manner.

Addison Capital, a privately owned and managed fee-based registered investment advisor (RIA) firm with $227 million under management, bought GBTC in the second quarter of 2020 and sold all of its positions in the third quarter.

tru Independence is an open architecture platform founded in 2014 that provides financial advisors with a full range of business services required to operate independently. tru Independence also bought GBTC in the second quarter of 2020 and sold it out in the third quarter.

FNY Investment Adviser is a hedge fund founded in 1986 in New York, currently managing approximately $2.94 billion in assets. It began buying GBTC in the fourth quarter of 2018 and sold 24,300 GBTC in the third quarter of 2020. It currently holds 10,700 GBTC, worth approximately $230,000.

Formidable Asset Management is a registered investment advisory firm founded in 2013 that provides wealth management, insurance, financial planning, alternative investment management and business consulting. It currently manages approximately $468 million in assets. It bought GBTC in both the first and second quarters of 2020 and sold all of its positions in the third quarter.

IFP Advisors provides financial services including investment consulting, portfolio, wealth management, financial planning and consulting, and pension and retirement planning consulting, and currently manages approximately $5.22 billion in assets. IFP Advisors first bought GBTC in the first quarter of 2016 and sold 9.81% of its GBTC holdings in the third quarter of 2020. It currently holds 133,800 GBTC, worth approximately $2.95 million.

Filbrandt Wealth Management was registered in 2018 and is an IRA in 17 states in the United States. It currently manages $973 million. It bought GBTC in the first and second quarters of 2020 and sold all of its positions in the third quarter.

Edge Wealth Management is a wealth management company that provides investment consulting, insurance, risk and portfolio management, and financial planning services to individuals, trusts, and charitable organizations. It currently manages approximately $934 million in assets. It first bought GBTC in the first quarter of 2019, bought and sold it several times in the middle, and liquidated it in the third quarter of 2020.

In addition to the above-mentioned institutions, there is also a special fund that has recently reduced its holdings of GBTC. This fund is ARK Investment Management's "Next Generation Internet ETF" ARKW (ARK Next Generation Internet ETF).

The relationship between ARK and GBTC can be traced back to September 2015, when ARKW, a subsidiary of ARK, was the first ETF to purchase GBTC. ARKW purchased GBTC directly through the OTC market in September 2015, which means that the GBTC held by ARKW does not need to be locked for half a year and can be bought and sold at will.

Unlike other funds, ARK announces changes in its holdings every day, allowing us to peek into the changes in its GBTC holdings.

According to data released by ARKW, it sold 141,000 GBTC on November 25 and 575,000 GBTC on November 30, totaling 716,000 GBTC. Coincidentally, the day after ARKW sold GBTC, the price of BTC fell. On November 26, the price of BTC fell by 8.39%, and on December 1, the price of Bitcoin fell by 4.73%.

Of course, it is difficult to attribute the Bitcoin plunge to ARKW's sale of GBTC, but ARK's position changes must also be paid attention to. (For more information about ARK, please read "The Queen's Investment Chess Game: Heavy Positions in Tesla, Betting on Bitcoin, Known as the Female Version of Buffett")

Current Positions

As of December 11, Grayscale Bitcoin Trust has issued a total of 581,902,300 GBTC, each containing 0.00095122 BTC.

According to Grayscale's rule design, the current circulating share of GBTC in OTC is about 383,917,495 shares (Note: the newly added BTC holdings in the past 6 months are about 188,327, so the nominal BTC circulation is: 553,517-188,327=365,190; GBTC circulating share is: 365,190/0.00095122=383,917,495; this calculation process does not take into account the 2% annual management fee charged by Grayscale).

Judging from the changes in the amount of BTC held by Grayscale Bitcoin Trust in the fourth quarter, it is not difficult to see that a large amount of funds are flowing in, including various new institutions. On November 30, Deribit Insights tweeted that the Guggenheim Macro Opportunities Fund applied to the SEC to invest $500 million in the Grayscale Bitcoin Trust.

Grayscale Bitcoin Trust increased its BTC holdings in the fourth quarter. Source: AICoin

BlockBeats has counted the institutions currently holding GBTC based on Nasdaq and Fintel data and the latest disclosure time.

Currently, there are 36 institutions holding GBTC, with a total holding of 59,728,728 GBTC, accounting for 10.26% of the total issuance.

BlockFi, which holds the most GBTC, is a crypto asset lending platform. The GBTC it holds is currently worth about $500 million. In February of this year, BlockFi completed a $30 million Series B financing. In April, Three Arrows Capital, the hedge management fund with the second largest share of GBTC, acquired part of its shares from other BlockFi investors. In July, BlockFi hopes to seek $50 million in Series C financing at a valuation of $400 million. BlockFi CEO Zac Prince said the company will go public as early as the second half of 2021.

It is worth noting that BlockFi and Three Arrows Capital are institutional users that hold more than 5% of the shares. When there is an increase or decrease in holdings, they need to submit documents to explain.

The fourth largest institution holding GBTC shares is ARK, and the third largest institution holding is ARKW.

Hedge fund Horizon Kinetics' five trust funds (No. 5, 6, 7, 8, 10 in the table) and one closed-end fund (RENN Fund, No. 23 in the table) all hold GBTC, with a total of 5.18 million GBTC, worth about $107 million. In addition to purchasing GBTC, Horizon Kinetics also participates in Bitcoin mining, hosting its mining machines at Core Scientific, which has a mining farm with a power load of 450 MW.

If you want to have a deeper understanding of the institutions that hold GBTC, you can click to read "Analysis of the Financial Backers Behind Grayscale" (Luddong Note: Due to different data sources, the number of institutions investing in GBTC in this article is slightly less than this article).