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Grayscale Investments Has Been Buying the Dip, Owns 1% of All Bitcoin

2 mins
Updated by Adam James
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In Brief

  • Grayscale's Bitcoin holdings kept growing in 2018, even while the total value of assets under management has been decreasing.
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Grayscale’s Bitcoin Investment Trust is entering the last month of the year on a high, at least in terms of Bitcoin holdings.
While the market has been in a downward spiral (cue the “death spiral”) in the past month, Grayscale’s clients have been using the opportunity to accumulate more of the largest digital asset. As it stands, Grayscale is holding around 200,000 bitcoins, which at the moment of the writing is more than one percent of the total current supply. Grayscale Bitcoin Investment Trust (GBTC), a product which was created at the inception of the firm, has been performing very well, according to disclosures from Grayscale. With assets under management of just under $1 billion, the trust overshadows the rest of the investment products of the firm.

Bleeding Market

The firm offers eight investment products focused on single assets for Bitcoin, Bitcoin Cash, Ethereum, Ethereum Classic, Litecoin, XRP, ZCash, and Horizen. Besides these, Grayscale offers one diversified product for large-cap digital assets. The total assets under management for the trusts excluding Bitcoin are a meager $56 million and represent just six percent of Grayscale’s portfolio. All of the investment trusts except the Bitcoin and the Ethereum Classic are showing negative numbers in performance between -85 percent and -60 percent. This is mainly due to the timing of the product launch, which was during the market rally from December 2017 to January 2018. The Bitcoin Investment Tru, on the other hand, was started in September 2013, when Bitcoin was at around $129 and boasts a 2,787 percent increase since then. This really puts into perspective how far Bitcoin as a digital asset has come.

Increased Demand with Lower Prices

Some of the crypto enthusiasts might claim this to be a dangerous situation of Bitcoin concentration; however, it is worth noting that all of the Bitcoin holdings belong to their investors and not to Grayscale Investments. The investment trusts offered by Grayscale enables investors to have exposure to Bitcoin price performance without dealing with the challenges of purchasing, storing and transferring digital assets. All holdings are securely stored with a third-party custodian in cold storage conditions. Grayscale investment products are available only to accredited investors in the U.S. and the minimum investment is $25,000. Prices for digital assets, including Bitcoin, continue to move downwards and some investors might start questioning their decision and contemplate exiting the cryptocurrency market. Meanwhile, on the other side, institutional investors are eager to invest more. To further the issue, this is not the only provider of digital asset funds signalling an increase in demand for participation in the market. Bitwise Management has also announced today two new cryptocurrency index funds. Ultimately the decision lies with every one of us and maybe, where the money goes, there is value to be had. What do you think? Let us know in the comments! 


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Christian Gundiuc
After finishing his studies in International Business Administration at the Frankfurt School of Finance & Management, Christian started working at a real estate development...