Grayscale Bitcoin Trust (GBTC) Is Making Money Moves
Bitcoin Halving is where the number of generated Bitcoin rewards per block is cut in half making the supply and demand of bitcoin a bit more imbalanced. Meaning the less Bitcoin available, the more demand there is for bitcoin, thus the higher price. And usually prior to the halving, the Bitcoin price tends to move higher in anticipation of the event.
Bitcoin rose from $8,000 to $10,000 in the nine days to May 7 before falling back to $8,100 by May 10. When May 11 came, the halving event on May 11 was a dud. Many say the price was already backed into the event as to why Bitcoin hasn't been able to close above the $10k level. Nevertheless, the reward for mining Bitcoin transactions has now been cut in half. Meaning supply has been cut in have and regards where demand is, it will pick up, creating an imbalance between supply and demand...eventually leading to higher prices.
Grayscale is the company behind the Grayscale Bitcoin Trust (GBTC). GBTC is a trust which buys and holds bitcoin and and other cryptocurrencies. A trust (an investment trust) is a company that owns a fixed amount of a given asset (like gold or bitcoin). Investors pool money and buy shares of the trust, owning contracts that represent ownership of the asset held by the trust.
The trust's bitcoin holdings don't generate any income that Grayscale could use to cover those costs, so they collect an annual expense ratio of 2% to cover its costs in managing the trust.
Independent researcher Kevin Rooke estimates that Grayscale has ramped up its Bitcoin accumulation to a rate equivalent to 150% of the new BTC created since the halving.
Crypto fund manager Grayscale Investments is accumulating Bitcoin at a rate equivalent to 150% of the new coins created by miners since the May 11 block reward halving.
According to data published by independent crypto researcher Kevin Rooke, Grayscale has added 18,910 BTC to its Bitcoin Investment Trust since the halving, while only 12,337 Bitcoins have been mined since May 11.
Last week, Rooke estimated that Grayscale had been buying Bitcoin at a rate equal to between 33% and 34% of new supply during the first quarter of 2020, having accumulated 60,762 BTC over 100 days.
Three weeks ago, Billionaire hedge fund manager Paul Tudor Jones said he was buying bitcoin Paul believes bitcoin will serve as a hedge against a jump in inflation due to central banks printing money around the world. Paul has been a successful trader for decades and said bitcoin reminds him of the role gold played in the 1970s.
Grayscale is among the few companies that provide the simplest custodial solution for wealth investors and institutions. And based on the buyinf frenzy Grayscale is on, institutions may now be actively allocating significant capital to Bitcoin to diversify their portfolio.
As you can see GBTC (yellow line) is nicely correlated to Bitcoin as whatever direction Bitcoin goes, GBTC goes.
Shorter term, look for GBTC to retest the weekly supply at $14.
This post is my personal opinion. I’m not a financial advisor, this isn't financial advise. Do your own research before making investment decisions.
Posted Using LeoFinance
