Grayscale Bitcoin Trust Holds Second Largest Bitcoin Stake Globally

Grayscale Bitcoin Trust Holds Second Largest Bitcoin Stake Globally


Grayscale Bitcoin (BTC) Trust: The Second Largest Bitcoin (BTC) Holder

Yesterday, Arkham released a report revealing that Grayscale Bitcoin (BTC) Trust holds the second- largest amount of Bitcoin (BTC) in the world. This trust as of now holds over $16 Billion worth of BTC, making it a whole lot of player in the cryptocurrency market. Although while Grayscale publicly reports its balances, it has chosen not to disclose the on-chain addresses associated with the trust.

An in-depth investigation uncovered more than 1,750 public addresses connected to Grayscale, each containing less than 1,000 BTC. With this information, it is estimated that the trust owns a total of approximately 628,000 BTC. In addition, Grayscale holds nearly $5 Billion in Ethereum (ETH) and numerous other digital currencies such as LINK, MATIC, UNI, and BAT.

The Grayscale Bitcoin (BTC) Trust: How It Works

Contrary to trending belief, the Grayscale Bitcoin (BTC) Trust is not owned by the Grayscale company itself. Instead, it is owned by shareholders who have purchased shares in the trust. Shareholders have ownership rights over the trust but not the actual Bitcoins it holds. Grayscale, as the fund manager, handles the Bitcoin holdings on behalf of the shareholders.

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Grayscale acquired the BTCs that back the trust from the market. The physical custody of the 628,000 BTCs is entrusted to Coinbase Custody Trust Company. It is worth mentioning that while the shareholders own the trust, the Grayscale Bitcoin (BTC) Trust is the entity that technically owns the BTCs.

Grayscale’s official website confirms the fund’s assets under management at $16.1 billion, with over 620 Million shares announced. Each share represents 0.00090050 BTC.

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The NAV Discount and Probable Conversion to ETFs

GBTC shares are not redeemable, which means the only way to sell them is on the market. During bear markets, this can lead to a decrease in their market value compared to BTC. And once the Grayscale Bitcoin (BTC) Trust was launched in 2018, its NAV was significantly higher than the market value of the underlying asset. Nonetheless, with the rise of Bitcoin’s price, the AUM surpassed the NAV.

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As of now, the NAV is still 19% below the AUM. The  capacity conversion of the Grayscale Bitcoin (BTC) Trust into ETFs could help reduce this difference. Shareholders would reach redeem their shares for an equivalent value in BTC, eliminating the gap between NAV and AUM. Grayscale has applied for SEC approval to transform the trust into an ETF, and the recent discovery that all 628,000 Bitcoin are on-chain bodes well for shareholders.

Hot Take: The Future of Grayscale Bitcoin (BTC) Trust

As we await the SEC’s decision on Grayscale’s ETF conversion application, the likelihood of redeeming GBTC shares for Bitcoin seems promising. Although while nothing is certain yet, the disclosure of on-chain Bitcoin holdings adds to the possibility of approval. If the conversion goes through, it might provide a more seamless and direct way for investors to engage in Bitcoin’s growth without the need to buy Bitcoin directly.

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Leo Nomist emerges as a maestro harmonizing the roles of crypto analyst, tenacious researcher, and editorial virtuoso, creating an unparalleled symphony of insight. Amidst the intricate world of digital currencies, Leo’s perspectives resonate like finely tuned chords, capturing the attention of curious minds from diverse horizons. His talent for deciphering complex threads of crypto intricacies blends seamlessly with his editorial finesse, translating intricacy into a captivating composition of understanding.

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