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Bitcoin: Grayscale buys 3x the amount of new BTC, Ethereum at 350% premium

  • The latest data from Grayscale Investments is showing an explosion of interest in Bitcoin and Ethereum from institutional investors.
  • In the past week, Grayscale has purchased nearly three times the amount of Bitcoins issued by the miners.
  • The Ethereum Trust’s premium over the spot market has fallen by 65% but is still around 350%.

As we have repeatedly reported on CNF in recent weeks, interest in Bitcoin and Ethereum by institutional investors is continuously growing in 2020. The tip of the iceberg is certainly Grayscale Investments, the world’s largest cryptocurrency asset manager. At the end of May, it became known that Grayscale has bought more than 1.5 times the number of newly mined Bitcoins since the third Bitcoin halving.

But not only Bitcoin, but also Grayscale’s Ethereum Trust has experienced a huge demand in recent months. According to a report from the end of April, the company owned about 1% of the circulating Ethereum (ETH), especially because the purchase rate of Grayscale has risen sharply in 2020. Grayscale had also revealed that 88% of all capital inflows in the first quarter came from institutional investors dominated by hedge funds.

Grayscale buys three times the amount of all new Bitcoins

As the latest data shows, Grayscale’s second quarter could end much more impressively. As Kevin Rooke informed via Twitter, Grayscale has bought almost half a billion dollars in Bitcoin since the halving. Last week set a new record. According to Rooke, Grayscale this week bought three times more Bitcoins than the miners created.

Last week, Grayscale added 19,879 BTC to its Bitcoin Trust. During the same period, however, the Bitcoin miners produced only 7,081 BTC. Since the halving Grayscale has bought 53,588 BTC, with only 39,544 BTC mined since then. In total, as Rooke found out, Grayscale now manages approximately 400,000 BTC in its Grayscale Bitcoin Trust.

If Grayscale maintains this pace and continues to buy 1,190 BTC per day as it has since the halving, the asset management firm could own approximately 3.4% of the Bitcoin offering (approximately 625,000 BTC) by January 2021.

Demand for the Ethereum Trust remains strong

While the demand for the Bitcoin Trust increased strongly last week, the interest in the Ethereum Trust (ETHE) has decreased somewhat. This week, the ETHE reached a low for the month of USD 82.5, down 65% from its annual high of USD 239 in early June. (Since each ETHE share corresponds to about 0.1 ETH, the “low price” can be explained)

However, at the current ETHE price of around USD 98, it is still trading at a premium of around 350% over the spot price. At the beginning of June, the price premium was still an incredible 948%. Nevertheless, the still significant price premium shows the huge demand for the Ethereum Trust. For both Bitcoin and Ethereum, the purchases by Grayscale could mean a significant shortage of available supply on the spot market in the long term and thus a price increase.

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