The cryptocurrency market took a hit on Monday, as investors reacted to the news that Grayscale Investments, the largest digital asset manager in the world, had sold some of its holdings in Bitcoin and Ethereum.
According to data from Bybt, Grayscale reduced its Bitcoin Trust (GBTC) by 8,249 BTC, worth about $164 million at current prices, and its Ethereum Trust (ETHE) by 139,012 ETH, worth about $53 million. The sales occurred between January 15 and January 21, and were the largest weekly reductions since Grayscale started reporting its holdings in 2013.
The news sparked a wave of selling pressure in the crypto market, as some traders feared that Grayscale was losing confidence in the long-term prospects of Bitcoin and Ethereum, or that it was preparing for a major market correction. Bitcoin dropped below $30,000 for the first time since December 28, while Ethereum fell below $1,000 for the first time since January 6. The total market capitalization of all cryptocurrencies declined by more than 10%, from $1.07 trillion to $957 billion.
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However, some analysts and industry insiders suggested that the Grayscale sales were not a sign of bearish sentiment, but rather a result of technical factors and portfolio rebalancing. Grayscale operates several trusts that allow accredited investors to gain exposure to cryptocurrencies without having to buy or store them directly.
The trusts trade at a premium or discount to the underlying assets, depending on the supply and demand dynamics in the market. For example, GBTC often trades at a premium to the net asset value (NAV) of Bitcoin, meaning that investors are willing to pay more than the actual value of the BTC held by the trust.
One possible explanation for the Grayscale sales is that some investors decided to take profits after GBTC reached a record high premium of 40% on January 14. By selling their GBTC shares at a premium, they could lock in higher returns than if they sold their BTC directly.
Another possible explanation is that some investors wanted to diversify their portfolios by switching from GBTC to ETHE or other Grayscale products, such as the Digital Large Cap Fund (GDLC), which holds a basket of cryptocurrencies including Bitcoin, Ethereum, Litecoin, Bitcoin Cash and Chainlink. GDLC saw an increase of 31,600 shares, worth about $5.6 million, in the same period that GBTC and ETHE saw reductions.
Grayscale itself has not commented on the reasons behind its sales, but it has reiterated its commitment to the crypto space and its bullish outlook for the future. In a tweet on January 21, Grayscale said: “Grayscale is always looking for opportunities to grow our family of products and offer investors exposure to new and exciting areas of the digital currency ecosystem.” The company also announced that it had raised a record $3.3 billion in the fourth quarter of 2020, bringing its total assets under management to over $24 billion as of January 22.
Despite the short-term volatility caused by the Grayscale sales, many crypto enthusiasts remain optimistic about the long-term growth potential of Bitcoin and Ethereum, as well as other emerging projects in the decentralized finance (DeFi) and non-fungible token (NFT) sectors.
They point to the increasing adoption of cryptocurrencies by institutional investors, corporations, governments and retail users, as well as the ongoing innovation and development in the crypto space. As Grayscale CEO Michael Sonnenshein said in a recent interview with Bloomberg: “We’re just getting started.”
Crypto Users surpasses 580M as BlackRock seeing inflows of Investors upon its Spot ETF Approval
According to a recent report by Crypto.Com, the number of global crypto owners reached 580 million in 2023, a staggering increase of 150% from the previous year. The report, which analyzed data from over 300 sources, including exchanges, surveys, and blockchain analytics, revealed that the crypto adoption curve was accelerating faster than ever, driven by factors such as institutional investment, regulatory clarity, innovation, and education.
The report also highlighted the regional differences in crypto ownership, with Africa leading the way with a 230% growth rate, followed by Asia (189%), Europe (180%), North America (161%), and Latin America (151%). The top countries by crypto ownership per capita were Nigeria, Vietnam, India, China, and the US.
Crypto.Com’s report also shed light on the most popular cryptocurrencies among global users, with Bitcoin still dominating the market with a 40% share, followed by Ethereum (18%), Tether (12%), Binance Coin (5%), and Cardano (4%). The report also noted that the rise of decentralized finance (DeFi) and non-fungible tokens (NFTs) contributed to the diversification of the crypto ecosystem, as well as the emergence of new use cases and communities.
The report concluded that the global crypto market was poised for further growth in 2024 and beyond, as more people become aware of the benefits and potential of cryptocurrencies. Crypto.Com’s CEO Kris Marszalek said: “We are witnessing a historic moment in the evolution of money and finance.
Crypto is not only an alternative asset class, but also a powerful force for social and economic change. We are proud to be part of this movement and to serve millions of crypto users around the world.”
BlackRock is seeing flows come from a number of sources, including retail, independent investors.
BlackRock, the world’s largest asset manager, has been witnessing a surge of inflows into its Bitcoin-related products, as more investors seek exposure to the cryptocurrency market. According to the company’s Head of US ETFs, BlackRock is seeing flows come from a variety of sources, such as retail investors, independent advisors, institutional clients, and even newcomers to the Bitcoin space.
In a recent interview with CNBC, BlackRock’s Head of US ETFs said that the company’s Bitcoin futures ETF, which launched in October 2021, has attracted over $1.5 billion in assets under management in less than three months. He also revealed that BlackRock has been offering other Bitcoin-related products to its clients, such as mutual funds and closed-end funds that invest in Bitcoin futures contracts.
The Head of US ETFs explained that the demand for Bitcoin exposure is driven by several factors, including the growing adoption of the cryptocurrency by mainstream companies and institutions, the increasing recognition of Bitcoin as a store of value and an inflation hedge, and the innovation and development of the crypto ecosystem.
He also noted that BlackRock is not only providing Bitcoin products to its clients, but also educating them about the risks and opportunities of investing in the cryptocurrency market. He said that BlackRock is committed to helping its clients navigate the complex and evolving crypto landscape, and to offering them a range of solutions that suit their needs and preferences.
BlackRock’s Head of US ETFs concluded by saying that he expects the interest in Bitcoin and other cryptocurrencies to continue to grow in the future, as more investors realize the potential and benefits of this new asset class.