Institution admission

After plummeting to $3,800 on March 12, the price of Bitcoin began to recover, and has been oscillating above $9,000 recently.

However, players in the currency circle found that the currency price rise this time is different from the past.

First of all, there is an abnormality in the USDT premium.

In the past, every time Bitcoin rose, USDT would have a positive premium, that is, the price of USDT exceeded the US dollar. But recently, USDT has maintained a negative premium. For example, when 1 US dollar is equal to 7.1 yuan, USDT is 7.04 yuan.

"As the currency price rises, and a large number of players in the Chinese currency circle enter the market, the price of USDT will rise, and a positive premium will appear." A currency practitioner said, "However, this time the currency price has risen, USDT has a negative premium, which shows that Chinese players are shipping, while foreign investors are taking orders.”

In addition, the price curve of Bitcoin has also shown strange patterns recently: the currency price often rises from Monday to Friday, and it will fall on weekends.

For example, on Friday, May 8, the price of Bitcoin crossed the $10,000 mark, reaching a recent high. But over the following weekend, Bitcoin began to fall, dropping as much as 19% in two days.

On Monday, May 11, the price of Bitcoin rose again, and did not start to pull back until Saturday.

What does this unusual currency price trend mean?

Some people analyzed that this is one of the evidences that overseas investment institutions have entered the currency market. "Because the employees of these institutions will buy coins on weekdays and rest on weekends."

So, which overseas institutions are constantly buying Bitcoin?

The Australian Bitcoin fund company ListedReserve has done statistics and found that in the first quarter of 2020, two "big households" in the United States purchased 85,000 Bitcoins, equivalent to 52% of the Bitcoin output during the same period.

The two big players, one is the Cash App owned by the US mobile payment company Square, and the other is Grayscale Fund (Grayscale).

The regular public asset reports of the Grayscale Fund also show that it is indeed buying Bitcoin frantically.

According to the report, as of April 15, the total value of Bitcoin trust assets managed by Grayscale Fund has reached 2.09 billion US dollars. According to the price of bitcoin at that time, it was equivalent to 315779 bitcoins.

As of May 15, Grayscale’s bitcoin trust assets reached $3.29 billion, equivalent to 353,621 bitcoins.

This means that in just one month, Grayscale Fund bought 37,824 bitcoins, an average of 1,261 bitcoins per day.

Before the halving of bitcoin production, 1800 bitcoins were mined every day. This means that the Bitcoin that Grayscale Fund buys every day is equivalent to 70% of the Bitcoin output.

This round of Bitcoin price rise may be the result of the promotion of large investors such as Grayscale Fund.

Who is Grayscale?

Where is the grayscale fund that bought so many bitcoins?

Grayscale Fund was established in 2013. It is a digital currency fund under the Digital Currency Investment Group (DCG). Its investment targets cover BTC, ETH, BCH, ETC and other currencies.

Through Grayscale Fund, individual and institutional investors can allocate digital currency assets in compliance. For example, as long as you buy the Bitcoin trust fund product "GBTC" on Grayscale Fund, it is equivalent to indirectly holding Bitcoin.

Holding 1 GBTC is equivalent to holding 0.00096 BTC. Currently, each GBTC has a net value of $11.07.

The buyer's Bitcoin private key will be hosted in Grayscale's cold wallet.

From this point of view, Grayscale Fund is just an ordinary asset management institution. Where does its success come from?

In the eyes of the outside world, Grayscale's fame is largely due to its marketing strength.

For example, whenever there is news about a Bitcoin ETF, Grayscale Fund will take the opportunity to promote its own trust products.

In May 2019, Grayscale Fund planned a successful marketing campaign, pushing its fame to the top.

At the same time, the Grayscale Fund launched the "Drop Gold" (throw away gold) campaign, which caused a sensation on Wall Street.

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Advertising by Grayscale Fund

But the real killer feature of Grayscale Fund is compliance.

As early as 2013, Grayscale Fund was approved by the SEC (US Securities Regulatory Commission) to raise funds from designated investors through non-public means.

In January 2020, Grayscale Fund was successfully registered with the SEC, becoming the first digital currency investment platform approved by the SEC.

Through the Grayscale Fund, Wall Street tycoons have a compliant channel to invest in Bitcoin. According to the latest report of Grayscale Fund, it currently manages a total of US$3.6 billion in assets, 88% of which come from institutional investors.

The special financial policy of the United States has also made Grayscale Fund popular with individual investors - 12% of Grayscale Fund's funds come from individual investors, one-third of which come from retirement accounts.

In the United States, many people do not have cash deposits, but rely on retirement accounts for investment and financial management. Individual investors can obtain tax benefits by investing through retirement accounts, but they can only invest in compliant financial products.

Therefore, if some Americans want to invest in Bitcoin, they will also choose a compliant platform such as Grayscale Fund.

However, investors also have to bear the premium brought by compliance.

secondary title

dispute

In the currency circle, Grayscale Fund is considered to be the direct promoter of multiple currency price increases.

"Greyscale is a 'dead bull' among institutions, only buying but not selling, and is firmly bullish." A player in the currency circle commented.

Unlike quantitative investment funds that are common in the currency circle, Grayscale Fund is a trust fund that does not trade frequently in the market. Its profit model is very simple: charge customers a management fee of 2%-3% per year.

Grayscale Fund also does not support investors' redemption of Bitcoin assets. Investors can only go to OTC Market (an American OTC exchange) to find buyers and sell GBC trust funds.

This means that in the secondary market of the currency circle, Grayscale Fund only exists to buy but not to sell. Therefore, it is regarded as a kind "comrade-in-arms" by many players and retail investors who are eager to increase the currency price.

People's ideas do have some basis.

In recent years, DCG has invested in more than 100 blockchain companies in more than 30 countries around the world, covering multiple fields such as public chains, exchanges, wallets, and media. Coinbase, an exchange well-known to players in the Chinese currency circle, and Coindesk, a blockchain media, have both been invested by him.

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DCG Investment Map

It is not difficult to see that whether it is the profit model of management fees or the industrial status of the parent company in the entire currency market, it is determined that Grayscale Fund can directly profit through the rise of currency prices.

However, in the currency circle, Grayscale Fund still has some controversy. In many cases, it stands on the opposite side of retail investors.

For example, in addition to mainstream currencies such as Bitcoin and ETH, Grayscale Fund also has a long-term heavy position in ETC. The latter is a fork coin of Ethereum, and its market value remains around 20 all year round. Generally speaking, such a small currency is not worthy of Grayscale's favor.

But in the currency circle, the close relationship between ETC, Grayscale and its parent company DCG has never been a secret:

DCG is an investor of ETC, and the boss of DCG, Barry Silbert, has stood for ETC many times.

In addition, Grayscale also insists on donating regularly to a development team of ETC, saying that it has donated more than $1.1 million in four years.

The same story happened to another currency ZEN (recently renamed Horizen). Its market value ranking in the currency market is outside the top 60 all year round, but it is valued by Grayscale - DCG is also an investor in ZEN.

For small currencies such as ETC and ZEN, Grayscale Fund is not only a big player, but also a trader behind the scenes. In these markets, the fate of retail investors is often in the hands of big players like Grayscale.

In 2020, under the epidemic, the global financial situation is confusing. After the Bitcoin production is halved, the future of the currency market is also unclear.

At this time, Grayscale Fund is constantly moving. Perhaps, institutional investors are running into the market.