Last week, the latest application for a Bitcoin exchange-traded fund faced rejection. But, a new product will soon be available to offer conventional investors even wider access to the cryptocurrency market.
A few days back, the Financial Industry Regulatory Authority (a non-governmental firm), provided the crypto asset manager Grayscale the permission to get shares of an ETF-like product. This product comes with varied cryptocurrencies to begin trading on public markets. It would be the first publicly-quoted security in America. And, it gains value from multiple selections of digital currencies.
Grayscale’s Digital Large Cap Fund has hold of cryptocurrencies accounting for around 70% of the industry’s market capital. It includes the market cap of Ethereum, Bitcoin Cash, XRP and Litecoin, who would have the ticker GDLCF as well as trade in over the counter market. Within a few days, the final step will be unveiled when the Depository Trust Company (record-bearing organization) agrees to maintain the security’s track.
Grayscale’s products are highly popular. Its products spent $255 million in new investment in the third quarter. And, in each quarter the inflows are getting tripled as per the report shared by Grayscale on Tuesday (15-Oct-2019). Most of the share of this money goes into GBTC (Bitcoin Investment Trust), which keeps track of Bitcoin price. Grayscale also experienced inflows for more products such as Ethereum, cryptocurrency, etc. Grayscale’s managing director Michael Sonnenshein shared in an interview that 84% of investors in the third quarter are institutions.
People who choose private placements to buy the assets can further sell them to conventional investors via their brokerages within a year. This turns them into long-term investors, and they are more likely to jump to securities when prices are lower.
This might be a clear reason that urged Grayscale to show its interest in the third quarter. This is a time when cryptocurrencies were not robust and Bitcoin lost around 29% value during this quarter.
Sonnenshein further added that many investors consider this pullback a good opportunity. However, if an investor chooses to buy the securities on the open market, then it includes paying a considerable premium to the asset’s price. Bitcoin’s every share holds the $8.10 worth of Bitcoin as per Tuesday’s prices. But, on the open market, the trust traded for $9.72. The value of the Grayscale’s trust might decline along with diminishing of scarcity value after the SEC’s approval of a Bitcoin ETF.