Letter #22: Bitcoin and the Impending Grayscale Bitcoin Trust (GBTC) Unlock
It has been said that institutional investments have been a primary driver of the Bitcoin bull market and it’s easy to see why. Purchases by MicroStrategy and Michael Saylor have regularly brought euphoria to both fans and markets within crypto and MicroStrategy is now one of the largest Bitcoin whales in the world. Tesla’s purchase of $1.5 billion U.S. dollars worth of Bitcoin back in February was one of the main catalysts for Bitcoin’s run-up in price from around $42,000 to nearly $65,000 over the following two months. And a number of name brand companies like Square, PayPal, Visa, and more have either expanded upon existing Bitcoin and Cryptocurrency offerings or have launched new services altogether.
However, one of the largest proxies for institutional investment and sentiment throughout it all, at least until the recent launch of several ETFs in Canada and elsewhere, has been Grayscale’s Bitcoin Trust (GBTC). The Trust, open solely to accredited investors and institutions for initial investments and deposits, saw nearly 800% growth in assets under management (AUM) during the bull run, growing from around $5 billion U.S. dollars in October 2020 to almost $40 billion U.S dollars in April 2021. However, the lull in Bitcoin’s bull market has been detrimental to Grayscale and there’s concern that Grayscale’s long-term prospects may pose a short-term threat to Bitcoin’s price performance, especially as it relates to the the unlocking of GBTC shares that will occur in the marketplace over the coming weeks.