Institutional Capital Flows into Grayscale’s Bitcoin and Ethereum Trusts

Institutions that are long on bitcoin or ether could be able to buy the two assets at a massive discount.

article-image

Source: Shutterstock

share

key takeaways

  • 13F filings show that institutions are adding exposure to GBTC and ETHE
  • During the last quarter, institutions added $42.7 million worth of new shares of GBTC and $3.8 million in ETHE

Grayscale’s Bitcoin Trust and its Ethereum Trust both saw a big inflow of capital from institutions during the last quarter as the overall digital asset market briefly turned into a bear market during the early summer. 

According to 13F filings — a requirement for funds that manage over $100 million in assets — institutional investors collectively increased their holdings of GBTC shares by 1,125,760, or $42.7 million, and holdings of ETHE by 127,216 or $3.7 million for the filing period that ended June 30. 

Ark Investment management

Catherine Wood’s Ark Investment Management led the way by adding 881,842 shares of GBTC and 82,867 shares of ETHE, according to filings. Ark now owns approximately 9.5 million shares of GBTC and 721,936 shares of ETHE.

As Blockworks has previously reported, Wood said in late June that Ark had “bought the dip” picking up more of Grayscale’s shares as well as expanding their position in Coinbase. 

Wood also believes that bitcoin has the potential to hit $500,000.

Rothschild Investment

Rothschild Investment came next adding 100,000 shares of GBTC, almost tripling its exposure from approximately 40,000 last quarter. Rothschild also added 13,817 shares of ETHE. The firm has approximately $1.2 billion in assets under management. 

Parkwood 

Filings show that Cleveland-based Parkwood also increased its crypto exposure. The firm added 32,000 more shares of GBTC bringing its total to 125,000 while also buying in to ETHE for the first time bringing its total ETHE holdings to 189,275

Institutional investors may be attracted to increasing their holdings of GBTC and ETHE because of their prolonged discount over the value of their holdings.

According to YCharts, shares of GBTC are trading at a discount of 10.4% over NAV while ETHE has a discount of around 4% over its NAV. When the funds go through their periodic unlocks, the holder of shares has the opportunity to redeem the shares for bitcoin at market price which makes for the ability to obtain crypto at a significant discount should a bull market kick in.

Both of Grayscale’s trusts have seen significant outflow from retail investors as regulators in Ontario, Canada have approved bitcoin and ether ETFs for the Toronto stock exchange. Retail investors tend to prefer the liquidity of an ETF versus the long lockup periods of a structured fund.

While the SEC hasn’t signaled when it intends to approve the many bitcoin ETFs before it, Grayscale has previously said that the fund has a sunset on it as it intends to convert it into an ETF in the future. 

But until that happens institutional investors seem content to park their capital in the funds to get crypto at a significant discount.

Want more investor-focused content on digital assets? Join us September 13th and 14th for the Digital Asset Summit (DAS) in NYC. Use code ARTICLE for $75 off your ticket. Buy it now.

Tags

Upcoming Events

Salt Lake City, UT

MON - TUES, OCT. 7 - 8, 2024

Blockworks and Bankless in collaboration with buidlbox are excited to announce the second installment of the Permissionless Hackathon – taking place October 7-8 in Salt Lake City, Utah. We’ve partnered with buidlbox to bring together the brightest minds in crypto for […]

Salt Lake City, UT

WED - FRI, OCTOBER 9 - 11, 2024

Permissionless is a conference for founders, application developers, and users. Come meet the next generation of people building and using crypto.

recent research

Blinks Report Image.png

Research

Blinks enable the ability to vampire attack user monetization of existing networks by inserting onchain and financialized functionalities directly within the popular social feeds and digital experiences of today.

article-image

Plus, how the FTX collapse played out in Asian countries

article-image

Kalshi founder Tarek Mansour said Thursday marked the “the first trade on regulated election markets in nearly a century”

article-image

I was excited about being on the precipice of realigning societal incentives and solving many issues plaguing our modern financial world

article-image

Cypherpunk Holdings has rebranded to Sol Strategies in a pivot to a Solana-first investment approach

article-image

BitGo’s wrapped bitcoin (wBTC) has a new custodial challenger

article-image

Make no mistake: Tether makes a ton of money. But exactly how much depends a lot on the price of bitcoin.