Bitcoin whales selling to institutions as Grayscale adds 7,188 BTC in 24 hours

[davinchi]

We are moving from "whales" situation in crypto where we didn't know who exactly had too many bitcoins in tens of thousands, to more like a company owned huge chunks instead and I don't know which one is better.

We didn't know who owned bitcoin in those large numbers back in the day, we still don't know many of them and that was the bad part but the bad part about companies going in is even if we know how much they know, we also leave the price to a centralized situation, if grayscale decides to sell every single coin they have today, they could crash the price right away.

Back when it was just some whales, they usually never moved all at once, which means harder crashes by whales, but here we are giving that power to some companies and that's scary.

[verita1]

Institutional investors will not sell their Bitcoin as PlanB says.

https://twitter.com/100trillionUSD/status/1336274591287799815?s=19

Of course, the price of bitcoin worries, but even worse is that all the bitcoin that these large investors have bought will not circulate in the market again is what is coming to light.

We need to hold our bitcoin because new changes are coming.

[Mauser]

We are moving from "whales" situation in crypto where we didn't know who exactly had too many bitcoins in tens of thousands, to more like a company owned huge chunks instead and I don't know which one is better.

We didn't know who owned bitcoin in those large numbers back in the day, we still don't know many of them and that was the bad part but the bad part about companies going in is even if we know how much they know, we also leave the price to a centralized situation, if grayscale decides to sell every single coin they have today, they could crash the price right away.

Back when it was just some whales, they usually never moved all at once, which means harder crashes by whales, but here we are giving that power to some companies and that's scary.

Yeah these massive transactions are definitely scary. These Companies are going to be a big player in the bitcoin market now. Do we know what the Whales are doing with there new fortunes? It could still be a good think for the crypto community if the whales would reinvest their money into alternative coins?

[Charles-Tim]

Grayscale is still on the move buying more bitcoin, it was surprising how this institutional investor bought more than the Bitcoin mined in November, 2020. And yet, buying more bitcoin.

https://www.coindesk.com/grayscale-has-19b-in-crypto-assets-under-management-up-from-16-4b-last-week
Digital asset manager Grayscale Investments has passed another milestone, reaching $19 billion in assets under management (AUM) on Dec. 28, up from the $16.4 billion announced last week.

[fillippone]

Grayscale is still on the move buying more bitcoin, it was surprising how this institutional investor bought more than the Bitcoin mined in November, 2020. And yet, buying more bitcoin.

https://www.coindesk.com/grayscale-has-19b-in-crypto-assets-under-management-up-from-16-4b-last-week
Digital asset manager Grayscale Investments has passed another milestone, reaching $19 billion in assets under management (AUM) on Dec. 28, up from the $16.4 billion announced last week.

As you can see from my spreadsheet, or from everywhere else, this increase in AUM is simply due to the rise in the price of BTC over the weekend. Actually yesterday the inflows were exactly zero.



Actually, we say an outflow due to the management fees.

So, it's easy to market an increase of AUM as a success, when you are literally rising with the high tide.

[Charles-Tim]

...

You are very right, and thanks for the correction. Also the $19 billion AUM is not only for bitcoin but also for some altcoins. The fact still remain that the largest grayscale holding is bitcoin with the current AUM of $16.3 billion which was around $14.1 last week which is even what I ought to have mentioned earlier. It is now clear to me how bitcoin price increase led to the increase in grayscale 'asset under management'.

[fillippone]

...

You are very right, and thanks for the correction. Also the $19 billion AUM is not only for bitcoin but also for some altcoins. The fact still remain that the largest grayscale holding is bitcoin with the current AUM of $16.3 billion which was around $14.1 last week which is even what I ought to have mentioned earlier. It is now clear to me how bitcoin price increase led to the increase in grayscale 'asset under management'.

Yeah, in between those posts Grayscale announced today's number. The weird thing is they had still 0 inflows. I knew they were closed to new investors, but still they managed to get loads of investments from old investors. Maybe they completely closed their funds.
I'll find out.

[jaysabi]

Grayscale is still on the move buying more bitcoin, it was surprising how this institutional investor bought more than the Bitcoin mined in November, 2020. And yet, buying more bitcoin.

https://www.coindesk.com/grayscale-has-19b-in-crypto-assets-under-management-up-from-16-4b-last-week
Digital asset manager Grayscale Investments has passed another milestone, reaching $19 billion in assets under management (AUM) on Dec. 28, up from the $16.4 billion announced last week.

As you can see from my spreadsheet, or from everywhere else, this increase in AUM is simply due to the rise in the price of BTC over the weekend. Actually yesterday the inflows were exactly zero.



Actually, we say an outflow due to the management fees.

So, it's easy to market an increase of AUM as a success, when you are literally rising with the high tide.

Do you know if they actually collect their management fee in bitcoin?  That's one thing that interests me I don't know the answer to.  I'm assuming if they do, they have to sell for USD anyway because they can't run the business denominated in bitcoin.  The rest of the economy runs on USD, so they have to transact in that currency.  Logistically, I don't know how it would work to collect the fee in Bitcoin.  Would that just be a slow drain on the amount of Bitcoins they have under management then?

[exstasie]

As you can see from my spreadsheet, or from everywhere else, this increase in AUM is simply due to the rise in the price of BTC over the weekend. Actually yesterday the inflows were exactly zero.

In fact, private placements are now closed. Existing clients can still buy, but if a company decides tomorrow that they want to start a Bitcoin reserve, they can't get exposure through GBTC.

The lack of new blood could help trigger a correction, as JPMorgan analysts pointed out here:

Inflows into the fund are running at about US$1 billion per month, the strategists led by Nikolaos Panigirtzoglou wrote in a note Friday.

While it’s hard to avoid describing Bitcoin as “overbought,” the flows into the trust “are too big to allow any position unwinding by momentum traders to create sustained negative price dynamics,” the strategists said. A major slowdown in those flows would boost the risk of a Bitcoin correction akin to the one in the second half of 2019, they said.

https://www.bnnbloomberg.ca/jpmorgan-says-flows-to-into-major-crypto-fund-are-key-to-bitcoin-s-outlook-1.1539440

[fillippone]

As you can see from my spreadsheet, or from everywhere else, this increase in AUM is simply due to the rise in the price of BTC over the weekend. Actually yesterday the inflows were exactly zero.

In fact, private placements are now closed. Existing clients can still buy, but if a company decides tomorrow that they want to start a Bitcoin reserve, they can't get exposure through GBTC.

A few minutes after the above post, I actually discovered not only they are closed to new investors, but also ,as you say, private placements are closed.
This means even old clients cannot buy new shares, hence the existing shares number stopped growing.

Read more here.

The lack of new blood could help trigger a correction, as JPMorgan analysts pointed out here:

Inflows into the fund are running at about US$1 billion per month, the strategists led by Nikolaos Panigirtzoglou wrote in a note Friday.

While it’s hard to avoid describing Bitcoin as “overbought,” the flows into the trust “are too big to allow any position unwinding by momentum traders to create sustained negative price dynamics,” the strategists said. A major slowdown in those flows would boost the risk of a Bitcoin correction akin to the one in the second half of 2019, they said.

https://www.bnnbloomberg.ca/jpmorgan-says-flows-to-into-major-crypto-fund-are-key-to-bitcoin-s-outlook-1.1539440

If you want to read the whole piece directly, you can read it here:

 Wall Street Reports On Bitcoin: JP Morgan Flows & Liquidity

Do you know if they actually collect their management fee in bitcoin?  That's one thing that interests me I don't know the answer to.  I'm assuming if they do, they have to sell for USD anyway because they can't run the business denominated in bitcoin.  The rest of the economy runs on USD, so they have to transact in that currency.  Logistically, I don't know how it would work to collect the fee in Bitcoin.  Would that just be a slow drain on the amount of Bitcoins they have under management then?

Exactly: their fees are collected in bitcoin trough a diminishing bitcoin percentage controlled by each share.
You can read all the details here:
Everything you wanted to know about Grayscale BTC Trust but were afraid to ask!

[exstasie]

In fact, private placements are now closed. Existing clients can still buy, but if a company decides tomorrow that they want to start a Bitcoin reserve, they can't get exposure through GBTC.

A few minutes after the above post, I actually discovered not only they are closed to new investors, but also ,as you say, private placements are closed.

This means even old clients cannot buy new shares, hence the existing shares number stopped growing.

That's what I thought too, until I saw the correction in this article:

CORRECTED 12/21/20 19:31: Rewrites headline to emphasize the closing is temporary. Corrects to note the trusts can still obtain capital from existing investors.

https://www.coindesk.com/grayscale-halts-bitcoin-trust-investments

So then I checked against your spreadsheet. Grayscale halted private placements on December 21st, but from the look of things, inflows continued for a few more days after that:



I took that to mean existing investors were still able to buy as stated in the Coindesk article, but maybe there was just some reporting lag and existing investors really are cut off. I'm not sure.

[fillippone]

As I understand if GBTC gets capitals, they have to issue shares. So if they get capital from an investor, new or old, they may issue shares representing such capital.
So, when they closed to new investors, I would have expected a slowing in inflows, not a halt.
This slowing didn’t happen, as probably “old” investors continued pouring capital (or in-kind BTC) into GBTC.
So sometimes over Christmas, they completely closed, fund subscriptions,  to both old and new investors, temporary, as they did in the past (with that banner on the website).
That resulted in the halt of inflows.

[sana54210]

Institutional investors will not sell their Bitcoin as PlanB says.

https://twitter.com/100trillionUSD/status/1336274591287799815?s=19

Of course, the price of bitcoin worries, but even worse is that all the bitcoin that these large investors have bought will not circulate in the market again is what is coming to light.

We need to hold our bitcoin because new changes are coming.

That is not a bad thing, in fact that is a very very good thing. Bitcoin investors would want bitcoin price to go up right? Well the best way to increase the price would be to make it as scarce as possible and not have many on the market, if 20 million coins were bought and sold every day on the market the price would go down a lot, but when it is few million that is a lot better. So long story short big investors did helped with the price without a doubt.

Also you know what else that is good for? The transaction fees. Because in the end if they just buy it and put it on cold storage that means they are not going to send and receive bitcoin, which means there are less btc going around the world, which would make things cheaper as well. We are not there yet but I am 100% sure we will be there once these big companies corner most of the bitcoin market.