Given the rate at which Grayscale usually buys Bitcoin, it seemed that the cryptomanagement company was trying to buy up all the existing Bitcoin. But this pattern stopped more than three weeks ago, and they haven’t picked up on it since.
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The Grayscale Bitcoin Trust Fund (GBTC) would normally file a Form 8-K with the Securities and Exchange Commission (SEC) on a weekly basis, stating its latest acquisitions of Bitcoin. But the last time such a report was filed was on June 25, when the company disclosed the purchase of nearly 20,000 BTCs. According to its second quarter report, GBTC was averaging $57.8 million a week in investments.
A Grayscale spokesman told Cointelegraph that the halt in BTC purchases is temporary and is due to a period of administrative silence:
„There was a period of administrative silence for the private placement of Grayscale Bitcoin Trust. The Trust is now open for subscription as of Friday, July 10 at 4:00 pm ET.
In any event, Grayscale has not issued any disclosures to the SEC about new Bitcoin acquisitions since then.
Grayscale is indicative of the institutional interest in Bitcoin
It is important to note that GBTC is not a hedge fund that buys assets with the expectation of making a profit on them later. Instead, it buys Bitcoin every time investors buy its shares. Currently, each share corresponds to 0.00095891 BTC.
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In the second quarter, 84% of investments in Grayscale came from institutional investors, mostly hedge funds. Therefore, this reversal is indicative of institutional interest in the asset class. The company itself boasted of its expertise, buying more Bitcoin than it was mining:
„After Bitcoin’s halving in May, GBTC’s second quarter inflows exceeded the number of newly mined Bitcoins during the same period. With such an influx of Grayscale in relation to freshly mined Bitcoin, there is a significant reduction in supply-side pressure, which may be a positive signal for the appreciation of the price of Bitcoin‘.
Why did institutional investors stop buying?
There are at least a couple of possible explanations for this sudden reversal. One is seasonal: July tends to be a slow time for investment activity. Many asset managers travel or take vacations. Another reason could be that Bitcoin Up has not been very active in recent months.
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While its rapid recovery in the wake of Black Thursday, it attracted much more attention from investors who were being hit by the traditional markets, and were concerned about the uncertainty of the unparalleled stimulus packages. But since early May, Bitcoin has been stuck in a „tentative“ mode. There are many less mysterious assets that can do the same.