Quick take:
- The share price of Grayscale Bitcoin Trust (GBTC) has increased by 63% since October 1st
- Grayscale continues to accumulate Bitcoin (BTC) owning approximately 2.7% of the total supply
- Investors who believe Bitcoin is overpriced could be buying GBTC as a long term hold
The share price of the Grayscale Bitcoin Trust (GBTC) has increased by 63% in the fourth quarter of 2020.
October 1st found GBTC trading at $11. At the time of writing, the same GBTC was valued at $17.96 as markets closed for the weekend on Friday, November 13th. The chart below provides a visual cue of the silent rise in the share price of the Grayscale Bitcoin Trust (GBTC).
Grayscale Continues to Accumulate Bitcoin
The impressive increment in the share price of the Grayscale Bitcoin Trust (GBTC) is due to the company of Grayscale continually accumulating Bitcoin.
In a Friday update via Twitter, the company declared that it had approximately $8.239 Billion worth of Bitcoin in its Grayscale Bitcoin Trust (GBTC). This means that Grayscale owns approximately 2.78% of the Bitcoin in circulation using BTC’s current market cap of $296 Billion.
Furthermore, Grayscale now manages a total of $9.8 Billion in digital assets as seen in the following tweet that also highlights the aforementioned value of the assets in its Bitcoin Trust.
11/13/20 UPDATE: Net Assets Under Management, Holdings per Share, and Market Price per Share for our Investment Products.
Total AUM: $9.8 billion$BTC $BCH $ETH $ETC $ZEN $LTC $XLM $XRP $ZEC pic.twitter.com/yiS4Nmv105
— Grayscale (@Grayscale) November 13, 2020
GBTC is an Affordable Alternative for Those Who Missed the Bitcoin Train
Connecting the dots, the share price of the Grayscale Bitcoin Trust (GBTC) could be rising due to investors buying the asset as a way of indirectly owning Bitcoin at a ‘cheaper price’.
At the time of writing, Bitcoin is trading at approximately $16k. This means that some investors view GBTC as a ‘cheaper way’ of owning Bitcoin without the hustles of storing the highly prized digital asset. At a share price of $17.96, traditional and crypto investors might be doing the math of getting more GBTC per dollar as shall be elaborated.
$1,000 worth of capital currently purchases 0.0625 BTC. The same amount of capital buys 55.68 GBTC. The latter amount creates the illusion of owning more than just owning a fraction of a Bitcoin. This could be one reason investors are flocking to buy GBTC in addition to Grayscale accumulating Bitcoin at ‘warp speed’.
