Grayscale Bitcoinย (BTC) Trust: The Second Largest Bitcoinย (BTC) Holder
Yesterday, Arkham released a report revealing that Grayscale Bitcoinย (BTC) Trust holds the second- largest amount of Bitcoinย (BTC) in the world. This trust asย ofย now holds over $16 Billion worth of BTC, making it a wholeย lotย of player in the cryptocurrency market. Althoughย 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. Inย addition, Grayscale holds nearly $5 Billion in Ethereumย (ETH) and numerous other digitalย currencies such as LINK, MATIC, UNI, and BAT.
The Grayscale Bitcoinย (BTC) Trust: How It Works
Contrary to trending belief, the Grayscale Bitcoinย (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.
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 isย worthย mentioningย that while the shareholders own the trust, the Grayscale Bitcoinย (BTC) Trust is the entity that technically owns the BTCs.
Grayscaleโs official website confirms the fundโs assets under management at $16.1 billion, with over 620 Million shares announced. Each share represents 0.00090050 BTC.
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. Andย once the Grayscale Bitcoinย (BTC) Trust was launched in 2018, its NAV was significantly higher than the market value of the underlying asset. Nonetheless, with the rise of Bitcoinโs price, the AUM surpassed the NAV.
Asย ofย now, the NAV is still 19% below the AUM. Theย capacity conversion of the Grayscale Bitcoinย (BTC) Trust into ETFs could help reduce this difference. Shareholders wouldย 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 Bitcoinย (BTC) Trust
As we await the SECโs decision on Grayscaleโs ETF conversion application, the likelihoodย of redeeming GBTC shares for Bitcoin seems promising. Althoughย while nothing is certain yet, the disclosure of on-chain Bitcoin holdings adds to the possibilityย of approval. If the conversion goes through, itย might provide a more seamless and direct way for investors toย engage in Bitcoinโs growth without the need to buy Bitcoin directly.
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