Grayscale is known for the Bitcoin and Ethereum Trusts (GBTC and ETHE) which attract institutions and accredited investors. However, not many know that Grayscale has also more cryptocurrency products and that one of them is Bitcoin Cash with the ticker BCHG.
What is Grayscale in simple words:
For the readers that don't know a lot about what Grayscale does, I will explain it quickly below.
Grayscale created the first legal product for institutions and wealthy investors to be able to legally invest in Bitcoin and later more cryptocurrencies including Ethereum, Litecoin, Bitcoin Cash, and more.
Grayscale buys according to their client's wishes. It holds the cryptocurrency in its custody and gives investors shares of them. This is called a Trust and the first trust it created was the Grayscale Bitcoin Trust. These shares have a lockup period time of 6-12 months depending on the SEC approval and after that period the investors can trade them in a regulated OTC market (OTCQX exchange).
The custody of these cryptocurrencies is always at Grayscale's management and from what I know, Grayscale never sold any of their holdings, as the shares that represent BTC, ETHE, and the rest are traded in the OTC market without any movement of the actual cryptocurrencies.
Why the institutional interest in Crypto and Bitcoin Cash?
The Grayscale Bitcoin Cash Trust is the financial instrument Grayscale offers to institutions and investors for exposure in the Bitcoin Cash cryptocurrency. And this interest in Bitcoin Cash keeps increasing.
With all the lockdowns and the shutting down of economic progress in the world, the only answer governments and Central Banks had, was to print more money, airdrop to corporations, institutions, and individuals, and keep the money printers running for almost one year now.
The debt has reached above the ceiling in most economies and most national fiat currencies are trembling. Bond yields even turned negative for the first time in history and liquidity was overflowing the market, casting fears of rising inflation, in some cases hyperinflation, and perhaps a prolonged recession.
The US economy as well as most economies around the world are crumbling. Economists feel that the dollar and most fiat currencies will depreciate faster and lose their value under the extreme printing and increasing of M1 supply.
For this reason, institutions and thinking investors around the world don't like sitting in cash and having their wealth devalued from rising inflation.
Grayscale has been buying cryptocurrencies for its customers for months now, and after the market crash of March 2020 has been buying more Bitcoins than the new ones minted. Almost the same for Ethereum that comes next.
Now it is the turn of Bitcoin Cash, as institutions are hungry for exposure in more cryptocurrency assets, and find in Bitcoin Cash features they couldn't find in Bitcoin.
Grayscale and BCHG
Bybt gives us the best information on institutional investment in all Grayscale's products and Bitcoin Cash is currently fourth in volumes below Bitcoin, Ethereum, and Litecoin, but is rising rapidly.
Currently, Grayscale is holding 289,77K BCH at a total valuation of $153.7 million, with a 10% monthly rise in investors positions in the BCH Trust, and close to a 70% rise for the past three months.
There is also a premium of 546.86% in the OTC market where BCHG is traded, meaning buyers in the OTC market are buying exposure in Bitcoin Cash at five times higher price. There was a similar premium earlier in 2020 for both Bitcoin and Ethereum, and this was a gap that was filled at the beginning of this year. Currently, both GBTC and ETHE are trading at a discount, around -3.5% from the market price on crypto exchanges. This could be an indicator of an upcoming surge in price for Bitcoin Cash but we could be waiting for some time in case this is to happen.
This is a very bullish case for Bitcoin Cash and as I see it, there could be increased institutional interest from the Grayscale Trust for longer and this will lead to the BCH price rise in the short term. The rising momentum and interest for cryptocurrency assets are reflected in the Bitcoin Cash chart, as the interest has reverted to altcoins with much potential, as the big money sees this.
Thanks for reading!
More info: https://grayscale.co/bitcoin-cash-trust/
Interesting please subscribe my channel too