Digital Currency Group plans to buy up to $250 million worth of shares of Grayscale Bitcoin Trust, which is managed by the New York-based crypto-fund manager it owns. For reference, each Grayscale Bitcoin Trust (GBTC) share is trading at $51.20 at the time of publication.
DCG will use cash on hand to fund its exposure to Bitcoin, which reflects a direct bet on cryptocurrencies as Grayscale makes Bitcoin available to investors in the form of shares. The exchange-listed Bitcoin Trust invests solely and passively in bitcoin.
The move comes amid a remarkable new bull run for cryptocurrencies that have seen Bitcoin eclipse $56,400 for the first time in two weeks. The new rise has helped Grayscale grow from $2 billion in assets under management at the start of 2020 to more than $42 billion as of yesterday.
However, Digital Currency Group clarified that the purchase authorization does not reflect an immediate action to buy GBTC shares, nor does it obligate the firm to acquire any specific number of shares in any period. In addition, the order could be expanded, extended, modified or discontinued at any time, DCG said.
“The actual timing, amount, and value of share purchases will depend entirely upon a number of factors, including the levels of cash available, price and prevailing market conditions,” the company added.
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Moreover, Barry Silbert’s parent company owns OTC crypto trader, Genesis Trading and cryptocurrency news site, CoinDesk. Despite this wide exposure to the crypto industry as a whole, the firm was not aggressively purchasing Bitcoin from the open market.
However, Silbert has been a big backer of Ethereum Classic (ETC), which market cap grew to nearly $3 billion in 2017, before falling back within a broader selloff across the cryptocurrency markets.
When a wave of institutional investors started to warm to Bitcoin through the second half of 2020, Tesla, Square and other Wall Street whales including Microstrategy adopted the policy of placing their cash surpluses into crypto.
Besides institutional investors, which accounted for 93 percent of the total investment in the fourth quarter, Grayscale said accredited individuals, retirement accounts and family offices increased their involvement.