Everything you wanted to know about Grayscale BTC Trust but were afraid to ask!

[fillippone]

As promised, a little update on Grayscale.
Today is End of Quarter: let's see how good we are at guessing numbers checking those with official numbers when will be released.



They closed the quarter with 4,8 Billion of AUM, equivalent to 449,789 BTC, or 2.43% of the total Bitcoin Supply.
During the last quarter they bought $722,461,280 worth of Bitcoins (-4.8% QoQ) equivalent to 64,896 BTC (-22% QoQ).
They bought roughly the 79% of the total mined Bitcoin in the Quarter.
This BTC amount grants them 24.6 BTC of daily revenues.

Excel link

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[Lucius]

All I can say is that these are really impressive numbers, and especially this figure showing daily revenues which currently amounts to $267 800. What’s a little weird to me though is that despite investors like Grayscale really buying quite large amounts of BTC, and even with definitely positive news like MicroStrategy converting 1/3 of company money into BTC there isn’t any significant impact on price.

Maybe the whole thing isn’t raised to a sufficient media level, maybe ordinary people don’t have enough money for risky investments or it’s still too early to expect some other big players to get into the game as well? As things currently stand, the fairly stable price seems to suit those who are in full swing and do not seem to intend to stop.

[Karartma1]

As promised, a little update on Grayscale.
Today is End of Quarter: let's see how good we are at guessing numbers checking those with official numbers when will be released.



They closed the quarter with 4,8 Billion of AUM, equivalent to 449,789 BTC, or 2.43% of the total Bitcoin Supply.
During the last quarter they bought $722,461,280 worth of Bitcoins (-4.8% QoQ) equivalent to 64,896 BTC (-22% QoQ).
They bought roughly the 79% of the total mined Bitcoin in the Quarter.
This BTC amount grants them 24.6 BTC of daily revenues.

Excel link

I am utterly impressed, you did an amazing astounding job here. Holy Gray(l)scale is becoming one of the biggest Bitcoin whales around. I guess we still need to confirm your data but even if you are only 50% right those numbers are crazy! Good job (can't merit sorry, I will keep some for you, deserved).

[VB1001]

Nice summary as always, thx, fillippone
High sums of BTC are being accumulated, it may be that this year we will not see ATH but it will not take long to appear, each time there are less BTC, when people want to realize, they will have missed the train.

[JayJuanGee]

As promised, a little update on Grayscale.
Today is End of Quarter: let's see how good we are at guessing numbers checking those with official numbers when will be released.



They closed the quarter with 4,8 Billion of AUM, equivalent to 449,789 BTC, or 2.43% of the total Bitcoin Supply.
During the last quarter they bought $722,461,280 worth of Bitcoins (-4.8% QoQ) equivalent to 64,896 BTC (-22% QoQ).
They bought roughly the 79% of the total mined Bitcoin in the Quarter.
This BTC amount grants them 24.6 BTC of daily revenues.

Excel link

How come I am confused by your chart?

Are you saying that the "official numbers for the third quarter" have not been released yet, and that is why all of the third quarter boxes are NOT filled? 

Surely, you have not gotten the square numbers yet, which would go in some of the 3rd quarter boxes.

Maybe it is just me?

[fillippone]

As promised, a little update on Grayscale.
Today is End of Quarter: let's see how good we are at guessing numbers checking those with official numbers when will be released.



They closed the quarter with 4,8 Billion of AUM, equivalent to 449,789 BTC, or 2.43% of the total Bitcoin Supply.
During the last quarter they bought $722,461,280 worth of Bitcoins (-4.8% QoQ) equivalent to 64,896 BTC (-22% QoQ).
They bought roughly the 79% of the total mined Bitcoin in the Quarter.
This BTC amount grants them 24.6 BTC of daily revenues.

Excel link

How come I am confused by your chart?

Are you saying that the "official numbers for the third quarter" have not been released yet, and that is why all of the third quarter boxes are NOT filled? 

Surely, you have not gotten the square numbers yet, which would go in some of the 3rd quarter boxes.

Maybe it is just me?

Exactly, the two columns on the left report official numbers (I think I’m going to take out square fro this spreadsheet as it is quite confusing).
The other columns are my number crunching efforts, that can deviate from official numbers, for a variety of reasons.
Hopefully I will get more precise with time, trying to figure out which method is better at guessing.

[JayJuanGee]

As promised, a little update on Grayscale.
Today is End of Quarter: let's see how good we are at guessing numbers checking those with official numbers when will be released.



They closed the quarter with 4,8 Billion of AUM, equivalent to 449,789 BTC, or 2.43% of the total Bitcoin Supply.
During the last quarter they bought $722,461,280 worth of Bitcoins (-4.8% QoQ) equivalent to 64,896 BTC (-22% QoQ).
They bought roughly the 79% of the total mined Bitcoin in the Quarter.
This BTC amount grants them 24.6 BTC of daily revenues.

Excel link

How come I am confused by your chart?

Are you saying that the "official numbers for the third quarter" have not been released yet, and that is why all of the third quarter boxes are NOT filled? 

Surely, you have not gotten the square numbers yet, which would go in some of the 3rd quarter boxes.

Maybe it is just me?

Exactly, the two columns on the left report official numbers (I think I’m going to take out square fro this spreadsheet as it is quite confusing).
The other columns are my number crunching efforts, that can deviate from official numbers, for a variety of reasons.
Hopefully I will get more precise with time, trying to figure out which method is better at guessing.

Thanks for that further elaboration..   Sometimes it can be so hard to keep up with all things going on, and also are we looking at the comparison of apples to apples or is there some other thing that might have been changed in the comparison data.

You are likely correct that removal of Square from this particular presentation would likely make the data more straight forward, since in this thread you seem to want to focus on the BTC activities (maybe acquisition, holding and liquidations) of Grayscale.

Also, previously, I did appreciate seeing the Square information, and even the comparison of the BTC acquisitions / holdings of Square and Grayscale.

I wonder if there is a thread or a location in which the BIG daddy HODLers are being compared and shared - and sure that data is likely all over the place - because there are BIG ones, but then those BIG ones change relative to one another too with the passage of time.. and also, sometimes it is quite difficult to know the actual number of coins that they are holding or acquiring and if their proclamations of their holdings and acquisitions are accurate also.

Even with Grayscale, I have seen questioning of the accuracy of their data but also if they might be able to do things behind the scenes by proclaiming that they are doing one thing while doing something else... Of course, some heavily regulated companies might be worried about getting caught doing those kinds of things - even though we know in traditional financial industries (or even non-financial industries that end up having fiduciary duties), on a likely too common basis, BIG companies get caught doing things that they were NOT supposed to be doing.

[cryptopediabd]

I was fabulously impressed when I check the data. Yes this are really pretty attractive revenue & currently worth 449,789 btc, just fabulous. I am surprised because grayscale is buying a huge amount of Bitcoin, but there is no negative impact on bitcoin market price.

Looking like Grayscale will impact on the bitcoin whale price at any moments. I don't want to miss the flight.

[Karartma1]

I was wondering if this Holy Gray(l)scale Btc buying frenzy could counter-oppose the almost certain troubles that the market will suffer due to the Bitmex, CFTC drama. It looks like the market is neither able or capable of understanding the importance that decisions taken by the likes of MicroStrategy, Grayscale etc. could impact the price on the long run.
Going back to fillipone data, now that the analysis tool is in place we only need to wait official data.

[DooMAD]

Alot money will Exchange but where the Money is Come from and where the coins come from?

If it's not your BTC, then arguably it's none of your business where the money comes from.  But given that these are institutional investors, the money likely comes from wealthy individuals looking for better ROI than they might find on the stock markets.

And what do you mean by "where the coins come from"?  The same place where all other bitcoins come from, algorithmic emission through mining.

[fillippone]

If it's not your BTC, then arguably it's none of your business where the money comes from.  But given that these are institutional investors, the money likely comes from wealthy individuals looking for better ROI than they might find on the stock markets.
<...>

Just remember that the only one profiting from Grayscale are accredited investors buying shares in the primary market, that is now closed, by the way.
They might even be buying those coins with “in kind” purchases.
Basically: Grayscale is benefiting only those who already are rich, in fiat or bitcoin.

[Polo7]

If it's not your BTC, then arguably it's none of your business where the money comes from.  But given that these are institutional investors, the money likely comes from wealthy individuals looking for better ROI than they might find on the stock markets.
<...>

Just remember that the only one profiting from Grayscale are accredited investors buying shares in the primary market, that is now closed, by the way.
They might even be buying those coins with “in kind” purchases.
Basically: Grayscale is benefiting only those who already are rich, in fiat or bitcoin.

It means?  Btc to up or down? 
I think it might go down as they just dump on USA dollar the btc

[fillippone]

The Quarterly results are out.

Q3 2020 Investment Highlights2
Total Investment into Grayscale Products: $1.05 Billion
Average Weekly Investment – All Products: $80.5 million
Average Weekly Investment – Grayscale® Bitcoin Trust: $55.3 million
Average Weekly Investment – Grayscale® Ethereum Trust: $15.6 million
Average Weekly Investment – Grayscale® Digital Large Cap Fund: $3.5 million
Average Weekly Investment – Grayscale Products ex Bitcoin Trust3: $25.2 million
Majority of investment (84%) came from institutional investors, dominated by hedge funds.

1.05 Billion certainly surprised on the upside, as I have been following quite closely the daily numbers, and I expected a lower number.

The core of the inflows was into their Bitcoin Trust:

Grayscale Bitcoin Trust Among Fastest Growing Investment Products: Grayscale Bitcoin Trust experienced $719.3 million in 3Q20 inflows. The Trust has seen its assets under management (“AUM”) surge from $1.9 billion to $4.7 billion YTD.  Grayscale Bitcoin Trust does not operate a redemption program and its shares do not trade on a national securities exchange. The trust is therefore not an ETP or ETF. Still, if the Trust were compared to global ETPs and ETFs with over $1B AUM at the start of the year, it would rank as the third-fastest growing product YTD with an AUM increase of approximately 147%.

Wow, this means other product experienced an incredible growth!
They were led by ETH fun, apparently, surely helped by DeFi Craze



You can download the report here.

[Intrepidity]

Alot money will Exchange but where the Money is Come from and where the coins come from?


And what do you mean by "where the coins come from"?  The same place where all other bitcoins come from, algorithmic emission through mining.

Why do I think that answer is best ever on the forum?

[fillippone]

Numbers have been released.
I just want to make some analysis detailing some aspects that I do care more about.
One thing I want to reassure you about is that from next release I will be able to track the data more effectively and I will be able to actually even better analyse those data before the Greyscale release!

So let's start looking at the AUM for every fund:



We see a major increase in the ETH fund, that rises from 9.50% of AUM to 13,70%. Probably the DeFi craze ad some effect on this, with many considering putting on long positions on the ETH fund.



The growth in the ETH fund is clear also from the AUM graph:



Of course the rise in the AUM as caused also from the rise in the bitcoin price, that inflated the value.

One way to look at the growth in the funds in BTC:



Of course also this measure is distorted. If BTC appreciates, for a given amount of USD of inflow, less and less bitcoin will be bought.
So looking at the very bullish flow of BTC investments, I am very confident on the marco trend of subscriptions.

Also a premium of Price compared to NAV has been under a sort of pressure lately:



It is still very high on my opinion, but it's far from historical nonsense high.


This is a very quick overview of the current situation.
I have some more insight in the making for you.
Stay tuned.



EDIT: I checked my predictions in this post, and I must say I was quite close to the official numbers. I fine tuned a couple of indicators, and I will be able to give accurate predictions, I hope.

[fillippone]

One of the key aspect of the Grayscale Fund is the primary Market.
We have seen this market is not available to the retail investor, but only to institutional investors and accredited individual.
This is of course something that is not clear and the true key of GrayScale success.
The naïve Bitcoin Investor could thing Grayscale buys their Bitcoins  from miners, this is an interesting rhetoric, as it also fuels the "scarcity" theme, but it is ultimately wrong, as the main suppliers of BTC are the whales, who want to profit from the huge premium their shares have on the second market.

But what can we discover on this peculiar category of shares?
What can we infer analysing at this number? 
IS is true that aa large number of shares is bullish when subscribed, but an be "dangerous" in the future?

I will try to shed some light on all the above points.


How many Shares in the primary market are out there?

Of course there are many ways to discover the number of Grayscale shares, but the number is aggregate, and there is no differentiation from the primary and the secondary market.
The only place where we can have a "snapshot" of the situation is on the

Grayscale announced on January 21, 2020 To have been granted the status of SEC reporting Company:

Grayscale Bitcoin Trust Becomes SEC Reporting Company

This was interesting for our analysis for a precise reason:

Additionally, accredited investors who own or purchase shares from the Trust’s private placement now have an earlier liquidity opportunity as the statutory holding period of shares purchased through the private placement will be reduced from 12 months to 6 months, provided the other requirements under Rule 144 of the Securities Act of 1933, as amended (the “Securities Act”) have been satisfied.***
<...>

***The holding period reduction will become effective after Grayscale Bitcoin Trust has been a reporting company for at least 90 days and has satisfied the other requirements under Rule 144 of the Securities Act.

So from 90 days after January 21st, March 20th 2020, the holding period of primary market share would have been reduced from 1 year to 1 month.

The easiest way to check the current number of restricted shares is to check the official GBTC market, that details such information on a page dedicated to the security details of GBTC.
This is what you see:


page link


On the security section you can see the details:

• Outstanding Shares: this is the total number of outstanding shares. This data is widely available.
• Restricted Shares: this is the number of shares with a selling restriction (six months from issue date)
• Unrestricted Shares: this is the residual category: common shares without selling restrictions

I have tried in any possible way to download the historical data of the restricted shares, but I failed.

So I had to think a different approach: to obtain this number with the available (public) data.
Every time a share get issued, and we know when it is done, that share get a six month holding period. So it is easy to determine which is the date until such a share will be restricted, and after that it will be unrestricted.
So the total number of restricted share will be the sum of all shares with an "unlock date" in the future.
Pretty easy to compute such a total with an Excel spreadsheet.
I added the "Restricted Shares" sheet in this thread's spreadsheet:


spreadsheet link

Basically the "Restricted Shares" column sums all the "Inflow of restricted shares" with an "Unlock Date" in the future.
Luckily the total I obtain in the spreadsheet is very similar to the official one listed on the website. There are a number of minor reasons why those two numbers are slightly different, but I think we can safely neglect those, and concentrate on the overall meaning of this information.

The first thing we want to do is graph this information and see how it evolved in the past
(as always, you can find a continuously updated version on the spreadsheet):



Wee see that, from inception, the total number of the outstanding shares is equal to the restricted shares. At the time the holding period was one year, so basically, for the first year of the fund the restricted shares were the 100% of outstanding shares.
Nobody could sell the shares!
After an year the shares began available to trade ,and the restricted percentage began to decrease (right axis).
Of course, the slower the rate of issuance, the lower the percentage of restricted share.
We see that during the years we had a percentage of restricted shares around 20% of total outstanding shares.

Things began to become a little bit animated during the last year. The rate of issuance begun to increase dramatically, so did the percentage of restricted shares, getting up to little bit more than 30%.
Then GBTC became a SEC reporting fund on Jan 21st 2020, and 90 days later, on Apr 20th 2020, the lock up period decreased from one year to six months: six months of locked up shares became available to sella all of a sudden.
We then  saw a drop in the percentage of restricted share down to 13%.
This drop was very temporary, as Grayscale wen flat out on shares issuance and was quickly back to previous level and beyond, now sitting at a whopping 35%.

One might thing then: "wait, if there's a lock on the shares, when there's  the expiry of the lock period the issuers will rush to sell those to cash in the premium right?
Well, I strongly doubt this reasoning, but more on that later: let's see how it works.

In the following graph , we can see the current date on the middle, separating the "blue part" from the "red part":



The blue part are the past inflows (measured in BTC) chronologically ordered. The span of the graph is exactly six months.

The red part of the graph are the "outflows" in the coming six months.
Basically the red part is the left one flipped and "netted" of the Grayscale commission over the period (yearly commission is 2%, so over six month I took away a full percentage of the inflows).
We notice we can precisely forecast when a "big inflow" will become a "big outflow".

Does it means that when there is a big outflows there is a heightened probability of a selloff in BTC because of the selling pressure?
No, definitely not.
As we have seen in the OP, probably he who buys the GBTC shares is also selling futures, so to hedge the directionality of their bet, and be sure to capture the premium on the secondary market.
So the overall effect on the unlock date, combined from the selling on the underlying market and the buying back the short future position, actually cancel out.

This is an analysis i have seen around in the last months, so I hope now you understand that it is (probably) meaningless.



I hope you enjoyed reading this post at least as much as I enjoyed writing it.
I think it is the first time I read such an analysis around, as the restricted shares are quite an obscure object for many.
But you are not "one of the many" if you are reading this...

[fillippone]

Barry is investing in crypto currencies at space velocity He recently tweeted that they invested $ 300 million per day:

Grayscale is very cool. Their total capitalization has already exceeded $7 billion. At this rate, they will make $10 billion by the end of the year, and maybe more.

Ah, yes, Barry know exactly how to perform a good marketing stunt.
In a bull market you increase the AUM without doing nothing, as the AUM measured in USD terms grows only because the BTCUSD goes up.

What it really matters, in my opinion, is the total number of bitcoins under management.

[fillippone]

Grayscale is pushing full throttle on Bitcoin adoption.
They published a very interesting Report on Bitcoin adoption during last year.

This is the second consecutive year that Grayscale, the world’s largest digital currency asset
manager, surveyed investors to explore changing attitudes and perspectives around Bitcoin (see
2019 Bitcoin Investor Study for last year’s report). Since its inception more than a decade ago,
Bitcoin has become a popular topic of discussion for investors, advisors, financial institutions, service
providers, regulators, and policymakers. As more stakeholders come to the table on this nascent
asset, they have brought a variety of perspectives and research that collectively has helped the
world better understand how digital currencies fit within the existing global financial system - though
it’s clear the world is still in the early days of integrating Bitcoin into our everyday lives.
This year has been unlike any other in recent history. The COVID-19 pandemic and subsequent
economic recession have forced individuals, small businesses, corporations, and governments to
make radical changes in a short period of time, fostering opportunities for innovation on one hand,
yet causing economic distress and displacement on the other. This period of rapid change has
forced investors to respond in kind, and new trends have developed that will only be understood
years down the line. With that in mind, it’s not entirely surprising that our survey revealed a
significant increase in interest in safe haven assets compared to 2019’s results.
This year’s survey saw the continuation of some trends from last year, while other findings stood
out for being significantly different—and sometimes unexpected—given the market environment.
No matter what side of the (Bit)coin you may be on, it is critical to understand how today’s investors
view Bitcoin, the trends driving its growing popularity, the opportunities it presents, and the
challenges it still faces as the leader of the financial industry’s newest asset class.

I don't want to discuss the report in all the details: but only one slide is very interesting:




The only true dividing line between bitcoiners and nocoiner is apparently the age.
The time is on our side!


Read the full report Here

[Lucius]

It seems a bit illogical to me that only people older than 25 are taken into account, the same as those up to 64 years of age. I don't see why people under the age of 25 wouldn't be interested in Bitcoin, because I believe that we have a very large percentage of such members on the forum. On the other hand, people between the ages of 55-64 are taken into account, and the percentage of retirees who would invest in BTC is as high as 30%. The retirement age in the US may be different from the EU, but unless it is an early retirement, retirees would be those aged 65 and over.

Grayscale is definitely one of the main drivers of this trend, and the whole thing was actually accelerated by a pandemic that shook the already declining confidence in classic investments.

[fillippone]

It seems a bit illogical to me that only people older than 25 are taken into account, the same as those up to 64 years of age. I don't see why people under the age of 25 wouldn't be interested in Bitcoin, because I believe that we have a very large percentage of such members on the forum. On the other hand, people between the ages of 55-64 are taken into account, and the percentage of retirees who would invest in BTC is as high as 30%. The retirement age in the US may be different from the EU, but unless it is an early retirement, retirees would be those aged 65 and over.

Grayscale is definitely one of the main drivers of this trend, and the whole thing was actually accelerated by a pandemic that shook the already declining confidence in classic investments.

The reason is probably the total wealth o this cohort is still negligible on aggregate numbers, so probably not relevant for this analysis trying to determine the impact of every segmentation on bitcoin price.

Of course this information is not relevant as a static picture, but is of an utter importance when looking at the demographic dynamic. When the 18-25 will move into the working age (and wealth accumulation phase), the investment in BTC will be more relevant, also because the less interested in BTC investing (over 65) will be pushed away...