Wealth managers gain exposure to Bitcoin via Grayscale, according to new SEC filings

The Grayscale Bitcoin Trust, which trades under the ticker symbol GBTC, is being snatched up by institutional managers looking for more traditional exposure to digital assets.

New filings with the United States Securities and Exchange Commission, or SEC, reveal that four wealth management companies have acquired shares of Grayscale’s Bitcoin Investment Trust, offering further evidence of institutional adoption of digital assets. 

As first reported by MacroScope, a Twitter feed devoted to institutional trading and asset management, the firms disclosed their GBTC holdings in new filings for the period ending June 30, 2021.

Clear Perspective Advisors, an Illinois-based wealth manager, revealed direct ownership of 7,790 GBTC shares on Friday.

Ohio-based Ancora Advisors scooped up 13,945 shares of GBTC as of June 30. While that’s a small position for the multi-billion-dollar asset manager, it reflects an important strategic move given that the company has a long-term investment perspective.

Meanwhile, two additional firms added to their GBTC holdings for the June 30 reporting period. Boston Private Wealth, which had previously reported 88,189 GBTC shares as of March 31, increased its exposure to 103,469 shares. Ohio-based manager Parkwood boosteits holdings to 125,000 shares from 93,000 at the end of March.

Related: GBTC premium matches Bitcoin price crash levels as unlocking fear fades

Major firms are finding new and diverse ways for gaining exposure to Bitcoin and other virtual assets. As Cointelegraph reported, tech giant Intel recently disclosed a sizable position in Coinbase stock, which provides direct exposure to the digital currency market.

Institutions are likely to increase their exposure to digital assets in the coming months — provided that the bullish narrative continues to play out. Many crypto observers subscribe to four-year cycle theory, which attempts to explain and forecast Bitcoin’s price from one cycle low to another. With the crypto asset class returning above $2 trillion this week — representing a $700 billion recovery from the local bottom — it appears that the next phase of the bull cycle is gaining traction. 

Related: Bitcoin’s off-chain data points to more upward momentum for BTC price

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Weekly roundup: Ark Invest, Edge Wealth Management, and Rothschild Investment accumulate crypto

Cathie Wood’s Ark Invest purchased more than 450,000 GBTC shares in two separate buys this week.

As the price of Bitcoin returned to more than $32,000 this week, some major firms announced they had increased their exposure to cryptocurrencies through Grayscale’s crypto trusts.

According to a Friday filing with the U.S. Securities and Exchange Commission, or SEC, New York-based investment firm Edge Wealth Management currently holds 54,134 shares of Grayscale’s Bitcoin Trust (GBTC), valued at $27.13 at the time of publication, and 25,280 shares of the company’s Ethereum Trust (ETHE). The crypto holdings are worth almost $2 million at $1,468,655 and $466,668, respectively, roughly 0.3% of the $703 million total assets under management the company reported on Feb. 2.

Grayscale’s crypto trusts are not new investment opportunities for Edge. The investment firm held 37,605 GBTC and 17,300 ETHE shares in April, representing increases of 44% and 46%, respectively.

Some institutions’ exposure to Bitcoin (BTC), Ether (ETH), and other cryptocurrencies through Grayscale have increased as digital currencies seemingly play a larger role in the global economy. Similar filings with the SEC show Rothschild Investment Corp quadrupled its exposure to Bitcoin through Grayscale, owning 38,346 GBTC shares in April and 141,405 GBTC as of June 30. With a reported more than $1 billion in assets under management as of April 8, the Bitcoin trust shares represent less than 0.09% of the investment firm’s holdings.

However, Cathie Wood’s Ark Invest is continuing to purchase GBTC shares at higher rate than the two aforementioned companies. This week, the investment firm reported it purchased more than 450,000 shares of Grayscale Bitcoin Trust in two separate buys, bringing its combined holdings to more than 9 million shares, or roughly 0.5% of its portfolio. At its peak in March, GBTC represented 0.9% of Ark’s portfolio.

Related: Grayscale ‘100% committed’ to turning GBTC into Bitcoin ETF — CEO

“The investment community continues to express interest in the digital currency asset class, and the crypto ecosystem more broadly, and as these assets gain mainstream adoption, we anticipate investors will seek new ways to access digital currencies to further diversify their portfolios,” said Grayscale CEO Michael Sonnenshein in a letter to investors.

The reports of GBTC purchases come the same week Grayscale unlocked 16,240 BTC worth of its Bitcoin Trust shares after six months. Though there was some speculation the price of the crypto asset could be adversely affected by such a large release in a single day, BTC saw a roughly 2.9% increase in price week-over-week and reached $32,457 at the time of publication.

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Bitcoin’s time has come: TIME magazine to hold BTC on balance sheet

TIME magazine has partnered up with Grayscale to drop a series of educational crypto videos, and has agreed to be paid in Bitcoin.

Institutional fund manager Grayscale has partnered with acclaimed New York-based magazine TIME to produce an educational video series on the subject of crypto assets.

The partnership was announced on April by Grayscale’s CEO, Michael Sonnenshein, with Sonnenshein revealing that TIME and its president, Keith Grossman, will receive payment in Bitcoin.

Further, TIME does not intend to convert the Bitcoin it receives through the deal into fiat, and will hold the crypto asset on its balance sheet. No further details of the partnership have been revealed so far.

TIME was first published on March 3, 1923, with the magazine and online publication having been active in the crypto space of late. In March, TIME cashed in on the NFT mania by dropping a set of tokenized magazine covers on NFT marketplace SuperRare, with the “TIME Space Exploration – January 19th, 1959” NFT fetching 135 ETH worth almost $250,000 on March 30.

The company also revealed they were seeking a crypto-friendly Chief Financial Officer in the same month after listing the position on Linkedin.

“The media industry is undergoing a rapid evolution. TIME is seeking a Chief Financial Officer who can help guide its transformation,” the listing said.

According to Bitcointreasuries.com, TIME will become the 33rd publicly traded company to hold Bitcoin on its balance sheet. TIME joins the ranks of top U.S. companies Microstrategy — who have invested billions into BTC from August 2020, Square — who added 4,709 BTC to their treasury in October, and Tesla — which purchased $1.5 billion worth of BTC in January. Multinational investment corporation Blackrock also began dabbling in crypto during February, profiting more than $360,000 from a small long using Bitcoin futures.

This deal marks a significant partnership between giants of the mainstream and crypto worlds. Grayscale was founded in 2013 and has $46 billion worth of crypto assets under management, including roughly 3% of Bitcoin’s total circulating supply.

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BTC Balance Sheets: 42 Companies Hold 1.3 Million Bitcoin Worth More Than $65 Billion

BTC Balance Sheets: 42 Companies Hold 1.3 Million Bitcoin Worth More Than $65 BillionSince the company Microstrategy shifted a lot of its treasury reserves into bitcoin, a great number of companies have followed the firm’s lead. According to the web portal, bitcointreasuries.org, data shows that 42 companies are now represented on the list and the businesses hold more than $65 billion worth of bitcoin. The Corporate Bitcoin Stash- […]
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Here’s how the Purpose Bitcoin ETF differs from Grayscale’s GBTC Trust

The newly launched Purpose Bitcoin ETF surpassed even the most bullish expectations but how does it differ from Grayscale’s GBTC Trust?

Since 2017, investors have been anxiously awaiting a Bitcoin ETF approval as the existence of such a fund was an important symbol of mass adoption and acceptance from the realm of traditional finance. 

On Feb. 18, the Toronto Stock Exchange hosted the official launch of the Purpose Bitcoin ETF and the fund quickly absorbed more than $333 million in market capitalization in just two days.

Now that the long-awaited Bitcoin ETF is here, investors are curious about how it will compete with Grayscale Investments GBTC fund. On Feb. 17, Ark Investment Management founder and CEO Cathie Wood said the likelihood that U.S. regulators will approve a Bitcoin exchange-traded fund has gone up.

Although exchange-traded funds (ETF) and exchange-traded notes (ETN) sound quite similar, there are fundamental differences in trading, risks, and taxation.

What is an exchange-traded fund?

An ETF is a security type that holds underlying investments such as commodities, stocks, or bonds. It often resembles a mutual fund, as it is pooled and managed by its issuer.

ETFs have become a $7.7 trillion industry, growing by 65% in the last two years alone.

The most recognizable example is the SPY, a fund that tracks the S&P 500 index, currently managed by State Street. Invesco’s QQQ is another EFT that tracks U.S.-based large-capitalization technology companies.

More exotic structures are available, such as the ProShares UltraShort Bloomberg Crude Oil ($SCO). Using derivatives products, this fund aims to offer two times the daily short leverage on oil prices.

What is an exchange-traded note?

Exchange-traded notes (ETN) are similar to an ETF in that trading occurs using traditional brokers. Still, the difference is an ETN is a debt instrument issued by a financial institution. Even if the fund has a redemption program, the credit risk relies entirely on its issuer.

For example, after Lehman Brothers imploded in 2008, it took ETN investors more than a decade to recoup the investment.

On the other hand, buying an ETF gives one direct ownership of its contents, creating different taxation events when holding futures contracts and leveraging positions. Meanwhile, ETNs are taxed exclusively upon sale.

GBTC does not offer conversion or redemption

Grayscale’s Bitcoin Trust Fund (GBTC) is the absolute leader in the cryptocurrency market, with $35 billion in assets under management.

Investment trusts are structured as companies — at least in regulatory form — and are ‘closed-end funds.’ Thus, the number of shares available is limited and the supply and demand for them largely determines their price.

Investment trust funds are regulated by the U.S. Office of the Comptroller of the Currency (OCC), therefore outside the Securities and Exchange Commission (SEC) authority.

GBTC shares cannot easily be created, neither is there an active redemption program in place. This tends to generate significant price discrepancies from its Net Asset Value, which is the underlying BTC fraction represented.

An ETF, on the other hand, allows the market maker to create and redeem shares at will. Therefore, a premium or discount is usually unlikely if enough liquidity is in place.

An ETF instrument is far more acceptable to mutual fund managers and pension funds as it carries much less risk than a closed-ended trust like GBTC. Retail investors may not have been aware of the possibility that GBTC trades below net assets value. Thus the recent event might further pressure investors to move their position to the Canadian ETF.

To sum up, an ETF product carries a significantly less risk due to greater transparency and the possibility to redeem shares in the case of shares trading at a discount.

Nevertheless, the impressive GBTC market capitalization clearly states that institutional investors are already on board.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should conduct your own research when making a decision.

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