In-depth data: The scale of gray-scale asset management has doubled by 20 times a year. What is the impact of continuous buying and buying on the market?
Recently, Bitcoin broke through $19,800 and hit a record high. According to CoinMarketCap’s statistics, as of December 6, Bitcoin’s annual growth rate has reached 168.68%, and the increase since October alone has reached 82.17%. Regarding the motivation behind this round of bull market, the general market view is that the continuous deposit of institutions has promoted the continuous rise of currency prices. Among them, the big organization that has attracted much attention is Grayscale.
Grayscale is one of the world’s largest digital currency asset management companies, backed by the Digital Currency Group (DCG), founded in 2013. By issuing GBTC, ETHE, LECN and other “paper gold” in the secondary market of U.S. stocks, Grayscale has successfully connected the digital currency market and the traditional financial market, providing a platform for institutions and qualified investors to invest in digital currency assets in compliance. Coupled with the non-redeemable mechanism set by the gray scale and the lock-up period of up to 6 months, it has gradually become a powerful long force in the market.
According to Grayscale’s quarterly investment report, Grayscale’s asset management scale has expanded from approximately US$607 million in the fourth quarter of last year to approximately US$12.572 billion in the near future, a full 20-fold increase. Among them, what are the changes in the asset allocation of Grayscale’s products? Is continuing to buy Bitcoin the ultimate driving force for this round of price increases? Under the dual withdrawal mode, how big is the arbitrage space of the gray fund? PAData will use the investment data published by Gray Gray to explain in detail the changes in the asset management scale of Gray Gray’s products and their relevance to the market in the past six months.
More than 10 trust fund products launched in 2018
No new products in the past two years
Currently, Grayscale has launched a total of 10 investment products, 9 of which are single-asset trust funds and one is a multi-asset fund. BTC Trust is the earliest product launched by Grayscale, which was launched on September 25, 2013. Since then, until 2017, Grayscale has successively launched ETC Trust, ZEC Trust and ETH Trust. In 2018, as the global digital currency market entered its first peak of development, Grayscale not only launched the first multi-asset fund, Digital Large Cap Fund, but also launched 5 single-asset funds including BCH, LTC, XRP, etc. . But in the past two years, Grayscale has not launched any new investment products.
From the starting point of investment threshold, with the exception of BTC Trust and Digital Large Cap Fund which require more than US$50,000, the minimum investment quotas for the other 8 investment products are all US$25,000.
Grayscale obtains revenue by charging currency-based management fees. Currently, the annual management fee of BTC Trust is 2%, the annual management fee of ETC Trust and Digital Large Cap Fund is 3%, and the annual management fee of other products is 2.5%. These management fees will be directly deducted from the investor’s share of digital currency.
From the perspective of product model, Grayscale adopts an irredeemable perpetual trust model. After investors deposit funds through legal currency or digital currency, they will get the corresponding trust share. For example, the trust share corresponding to Bitcoin is GBTC , Investors can only trade trust shares in the secondary market of US stocks after the 6-month lock-up period ends.
Total currency assets exceeded $12.5 billion
Recent changes
PAData has compiled the investment data released by Grayscale since June this year. The data shows that in the last six months, Grayscale’s asset management scale has expanded from approximately US$3.867 billion on June 1 to approximately US$12.572 billion on December 4, an increase of up to 225%. Among them, as the price of Bitcoin has soared after October, the scale of Grayscale’s asset management has also grown rapidly. From October 1st to December 4th, Grayscale’s total holdings increased by 114.25%, and the asset management scale has basically stabilized at more than US$10 billion after November.
From the perspective of changes in the scale of asset management, since June, Grayscale’s asset management scale has expanded by an average of about 0.95% per day, which is equivalent to a daily increase of approximately US$64,894,800.
Especially after October, the scale of gray scale increase/decrease in a single day is relatively large, with 7 days if it exceeds 5%. It is worth noting that on November 30, after the Bitcoin price hit a record high, the scale of Grayscale’s asset management that day expanded by 13.34%, equivalent to approximately US$1.439 billion. On November 26, when Bitcoin was at a short-term low, according to the average estimate of the asset management scale of the month, the asset management scale of Grayscale on that day decreased by 17.66%, which is equivalent to a reduction of approximately US$2.151 billion.
The share of currency price BTC trust accounts for over 80%
ETH trust share has risen significantly
BTC Trust is the earliest product launched by Grayscale, and it has always been the most important product of Grayscale. Since June, the asset management scale of Grayscale BTC Trust has expanded from approximately US$3.403 billion on June 1 to approximately US$10.469 billion on December 4, an increase of approximately 207.66%. However, the proportion of the total holdings of BTC Trust in the total holdings of Grayscale decreased slightly, from 88.01% on June 1 to 83.27% on December 4, a drop of nearly 5 percentage points.
ETH is another asset that has attracted much attention this year. Grayscale ETH Trust’s asset management scale expanded from approximately US$331 million on June 1 to approximately US$1.677 billion on December 4, an increase of 406.16%, which is equivalent to a five-fold increase. Moreover, ETH Trust’s holdings as a percentage of the total holdings of Grayscale also showed an upward trend, rising from 8.57% on June 1 to 13.34% on December 4, an increase of nearly 5 percentage points.
Among Grayscale’s multiple investment products, the Multi-asset Fund Digital Large Cap Fund is also worthy of attention. According to Grayscale’s product introduction, the fund’s goal is to seek large digital assets that account for 70% of the entire digital asset market. The current targets include BTC, ETH, XRP, BCH and LTC, each including 0.00047320 BTC, 0.00273567 ETH, 0.00047615 BCH, 1.09619609 XRP, and 0.00154624 LTC.
Since June, the asset management scale of Digital Large Cap Fund has expanded from 34.1 million U.S. dollars to 171 million U.S. dollars, an increase of about 402.05%, which is equivalent to the increase in the asset management scale of ETH Trust. The fund’s total holdings also increased from 0.88% to 1.36%, and it has become an investment product second only to BTC Trust and ETH Trust and higher than other single currency trusts.
The change in the size of the trust fund is weakly correlated with the currency price of the day
In this round of bull market, many people believe that the upward momentum behind it comes from the continuous deposits of large institutions such as Grayscale. From the data point of view, what is the impact of Grayscale’s increase/decrease on the secondary market?
PAData calculates the Pearson coefficient between the daily increase/decrease scale of gray BTC Trust and the currency price of the day, the average currency price of 7 days before and after (excluding the current day), and the average currency price of 3 days (excluding the current day) for observation. The correlation between the two.
According to statistics, since June this year, on the whole, the increase/decrease of Gray BTC Trust has no correlation with the currency price. However, individual months showed a certain weak correlation, especially the increase/decrease of BTC Trust holdings had a certain weak impact on the currency price of the day. For example, in July, August and December of this year, the correlation coefficient between the increase/decrease of BTC Trust holdings and the currency price of the day reached about 0.5, and it reached 0.63 in December, which means that the BTC price of the day when BTC Trust increased its holdings It is likely to rise, and vice versa. The BTC price on the day when BTC Trust reduced its holdings is likely to fall.
But this still does not indicate that there is a causal relationship between the two, only that they are apparently related.
In addition to being slightly related to the currency price of the day, the increase/decrease of BTC Trust’s holdings is also slightly related to the currency price of the following week. For example, in September and December, the correlation coefficient between the increase/decrease of BTC Trust holdings and the average currency price of the next 3 days and the average currency price of the next 7 days also reached about 0.6, and the correlation between the average currency price of December and the next 3 days The performance even reached -0.77, which means that the BTC price is likely to fall within three days after the BTC Trust increases its holdings. On the contrary, the BTC price is likely to rise within three days after the BTC Trust decreases its holdings. In September, there was a slightly strong positive correlation between the increase/decrease of BTC Trust’s holdings and the average currency price of the next 3 days and the average currency price of the next 7 days. That is, the increase of holdings is likely to occur simultaneously with the increase of the currency price.
The increase/decrease of ETH Trust’s holdings are also similarly correlated with the currency price. Overall, the increase/decrease of ETH Trust’s holdings of Grayscale has no correlation with the currency price, but individual months show a certain weak correlation. The increase/decrease of the control scale is also slightly related to the currency price of the day and in the future.
For example, in June, July, August and December, the correlation coefficient between the increase/decrease of ETH Trust’s holdings and the currency price of the day reached about 0.5, which means that the price of ETH on the day of ETH Trust’s increase is likely to rise. vice versa. In addition, in July, September, and December, the increase/decrease of ETH Trust’s holdings was also weakly correlated with the average currency price of the next 3 days and the average currency price of the next 7 days. Among them, there was a negative weak correlation in December, that is, the increase of holdings is possible Simultaneously with the decline in currency prices.
Although Grayscale’s asset management scale changes and market changes are only very weakly related, the continued deployment of funds from large institutions represented by Grayscale has a hidden effect that cannot be ignored in boosting market confidence.
LTC and BCH have high off-market premiums
Because Grayscale has set up an irredeemable trust model, investors who want to make a profit can only be achieved by trading shares in the secondary market of US stocks. Grayscale currently has 6 products that can be traded in the secondary market, including GBTC (BTC Trust), BCHG (BCH Trust), ETHE (ETH Trust), ETCG (ETC Trust), LECN (LTC Trust) and GDLC (Digital Large Cap Fund).
PAData calculated the premium rate between each share price and the over-the-counter transaction price. According to statistics, except for ETC Trust’s share premium temporarily lower than 0, the premium space for other investment products is relatively large.
Among them, the share premium of BTC Trust is the lowest among all products at present, about 27.61%, and the average premium in the last six months is about 17.17%. The premium of ETH Trust this year is relatively high. The current premium is about 124.20%, which was as high as 949.06% in the middle of the year, and the annual average premium rate was as high as 208.81%. The premium of the multi-asset fund Digital Large Cap Fund has also performed well this year. It is currently about 61.22%. It was higher than 200% from August to October, and the annual average premium rate reached 110.64%.
Also worth paying attention to is the premium performance of LTC Trust and BCH Trust this year. Judging from the data disclosed by Grayscale, the annual average premium rate of LTC Trust shares is as high as 948.11%, the current premium is about 2677.09%, and the highest premium in the last six months is about 5873.72%. The premium is also abnormally high and the share of BCH Trust. According to statistics, its annual average premium rate is about 468.16%, the current premium is about 1252.40%, and the highest annual premium is about 1331.99%.
After further observing the trading situation on OTCQX, it can be found that the high OTC price that causes the extremely high premium rate has only a small amount of trading volume, which means that there is a certain chance of this extremely high return. Moreover, the shares of LTC Trust and BCH Trust were just listed on August 18. The initial IPO may fluctuate greatly, but it may gradually return to the market consensus. The premium of LTC Trust has seen a significant correction recently.
