How Far is GrayScale & Other Institutions Going to FOMO Bitcoin? Poll!

[thecodebear]

My opinion is I won't agree that grayscale and institutional investors are actually having a FOMO on Bitcoin. That's a big NO for me.

In finance, profit is almost the least option. The only reason why you're getting into somewhere is to sustain, hedge in long term.

Bitcoin is actually one of the options they choose and that is basically it. Grayscale has been there for quite some time now, so FOMO is not a thing. It's just that, the number of people who got interested in bitcoin is increasing, so are their names.

Yeah I would agree. I wouldn't call this FOMO. It's just that now finally institutional investors are realizing they should be buying bitcoin, so they are doing exactly that. We are still at the very beginning of this, but just in the past few months they have come into the market in a much more substantial manner than ever before. This will continue for years, not because of FOMO, but because they are making long term investments to hold a little bit of their portfolio in Bitcoin. As you say, they are getting in "to sustain, hedge in long term".

[aoluain]

My opinion is I won't agree that grayscale and institutional investors are actually having a FOMO on Bitcoin. That's a big NO for me.

In finance, profit is almost the least option. The only reason why you're getting into somewhere is to sustain, hedge in long term.

Bitcoin is actually one of the options they choose and that is basically it. Grayscale has been there for quite some time now, so FOMO is not a thing. It's just that, the number of people who got interested in bitcoin is increasing, so are their names.

Yeah I would agree. I wouldn't call this FOMO. It's just that now finally institutional investors are realizing they should be buying bitcoin, so they are doing exactly that. We are still at the very beginning of this, but just in the past few months they have come into the market in a much more substantial manner than ever before. This will continue for years, not because of FOMO, but because they are making long term investments to hold a little bit of their portfolio in Bitcoin. As you say, they are getting in "to sustain, hedge in long term".

and I doubly agree!
This is a long term venture by people and companies into Bitcoin. They are
liquidating their FIAT assets into Bitcoin because its a safe haven.

There are a few drivers at play now, a big one is COVID and how governments
are reacting to it, I.E fiscal stimulus packages which leads to the weakening of a currency.

The second consideration is the halving, supply has been halved and all of a sudden
the demand has massively increased.

IMO the third driver is the willingness for traditional investors like Grayscale
and Microstrategies to come out and remove the stigma and untruths connected to BTC

Bitcoins stock to flow model shows if we can follow it a rise to and over $100k this year.

In these times for investors looking to secure their assets there is no other place
to move them other than Bitcoin. All other traditional safe havens are losing their value.

[thecodebear]

To show how relevant Grayscale (and by proxy, institutional investors) are starting to become in Bitcoin, in the past 3 years Grayscale has bought about 24% of all the newly mined bitcoin during that time. This is just a single bitcoin investment fund, and the vast majority (about 80%) of that buying by Grayscale the past 3 years was done this year.

Grayscale alone is now buying far in excess of how much Bitcoin is being mined, meaning, they and other institutional investors just now starting to get into Bitcoin are going to be eating up the supply of anyone else selling: retail investors, the old breed of whales, etc. And they are gonna be eating it up fast. In the next couple years we should expect several million bitcoin to be sitting the wallets of corporations and investment firms not even counting Grayscale, with Grayscale alone going over 1 million Bitcoin at some point next year and likely hitting 2 million in the next few years.

I mean hell, a single company, that's only worth $3 billion now, and was only worth $1 billion when it started buying Bitcoin this summer, now owns 70,000 BTC by itself! Granted, that is the one example of an institutional investors actually FOMOing in, but since they did it early its FOMO in a positive way where it's just a great investment with essentially zero risk.

[exstasie]

To show how relevant Grayscale (and by proxy, institutional investors) are starting to become in Bitcoin, in the past 3 years Grayscale has bought about 24% of all the newly mined bitcoin during that time. This is just a single bitcoin investment fund, and the vast majority (about 80%) of that buying by Grayscale the past 3 years was done this year.

It's only one fund, but let's be clear: all the other funds are tiny. Coinshares and 3iQ are an order of magnitude smaller, and the European ETPs are almost a joke by comparison. Grayscale is the primary place where institutional investors have been taking their positions.

In the next couple years we should expect several million bitcoin to be sitting the wallets of corporations and investment firms not even counting Grayscale, with Grayscale alone going over 1 million Bitcoin at some point next year and likely hitting 2 million in the next few years.

I think Grayscale is going to peak and become less relevant in the next couple years. Once an ETF and other cheaper regulated options emerge in major equities markets (Grayscale charges an obscene 2% annual management fee and is listed in the pink sheet OTC markets), institutions will be heading elsewhere. Then they are going to arbitrage that GBTC premium towards 0% (and possibly even into the negatives), forcing Grayscale to reopen their share redemption program just to keep the market pegged to spot. Then GBTC will quietly be drained down in size.

All the empty ETF hype the last few years has everyone exhausted so no one cares about it anymore, but when one finally gets approved it's going to be a major game changer.

[thecodebear]

To show how relevant Grayscale (and by proxy, institutional investors) are starting to become in Bitcoin, in the past 3 years Grayscale has bought about 24% of all the newly mined bitcoin during that time. This is just a single bitcoin investment fund, and the vast majority (about 80%) of that buying by Grayscale the past 3 years was done this year.

It's only one fund, but let's be clear: all the other funds are tiny. Coinshares and 3iQ are an order of magnitude smaller, and the European ETPs are almost a joke by comparison. Grayscale is the primary place where institutional investors have been taking their positions.

In the next couple years we should expect several million bitcoin to be sitting the wallets of corporations and investment firms not even counting Grayscale, with Grayscale alone going over 1 million Bitcoin at some point next year and likely hitting 2 million in the next few years.

I think Grayscale is going to peak and become less relevant in the next couple years. Once an ETF and other cheaper regulated options emerge in major equities markets (Grayscale charges an obscene 2% annual management fee and is listed in the pink sheet OTC markets), institutions will be heading elsewhere. Then they are going to arbitrage that GBTC premium towards 0% (and possibly even into the negatives), forcing Grayscale to reopen their share redemption program just to keep the market pegged to spot. Then GBTC will quietly be drained down in size.

All the empty ETF hype the last few years has everyone exhausted so no one cares about it anymore, but when one finally gets approved it's going to be a major game changer.

Yup absolutely it's the main fund. Still very impressive (though does Bitgo custody for big clients? Cuz I just read they have $16 billion of crypto as well which is the same size as Grayscale, though maybe that's different because they are just custodying for clients, sort of like other platforms aimed at institutional players - like Coinbase I'm pretty sure has somewhere around that as well). I expect in the next few years we will see funds come to existence that also pick up hundreds of thousand of btc each. By the time there are better options on the table though GBTC might have close to 10% of all the bitcoin in existence up to that point!

Yeah agreed an ETF should make GBTC obsolete, and an ETF would be open to everyone equally so I would assume it would eventually grow to be larger than GBTC. ETF is when you get normal people throwing a couple percent of their retirement portfolio into Bitcoin.

But just the fact that Grayscale alone has taken 24% of the mined supply the past 3 years, and most of that has been probably in the past 6 months, is crazy. And I'm pretty sure the actual big 9 digit institutional buys we've been hearing about lately from companies and investment funds are actually buying Bitcoin for themselves through other platforms, like Coinbase's institutional services, and not Grayscale shares. So Grayscale is only one piece of the institutional buys, and yet it is buying massive amounts. All I can say is the future is looking very bright for anyone who owns Bitcoin!

[fillippone]

I think Grayscale is going to peak and become less relevant in the next couple years. Once an ETF and other cheaper regulated options emerge in major equities markets (Grayscale charges an obscene 2% annual management fee and is listed in the pink sheet OTC markets), institutions will be heading elsewhere. Then they are going to arbitrage that GBTC premium towards 0% (and possibly even into the negatives), forcing Grayscale to reopen their share redemption program just to keep the market pegged to spot. Then GBTC will quietly be drained down in size.

All the empty ETF hype the last few years has everyone exhausted so no one cares about it anymore, but when one finally gets approved it's going to be a major game changer.

The pressure to have an ETF is too big, as the premium in the Grayscale secondary market shows and the buying pressure on Microstrategy following their BTC investment, that made them an irritual, unregulated Bitcoin ETF.
SEC will have to eventually concede an authorisation to avoid major damages of people wanting to get long Bitcoin getting long sub-regulated vehicles, or dangerous Bitcoin proxies (Paypal CFD, for examples).

When an ETF will get approved in the US (in Europe we have something very similar, BTCE) Grayscale will see massive outflows in that new vehicle. Hopefully it will be not relevant for the underlying.

[figmentofmyass]

SEC will have to eventually concede an authorisation to avoid major damages of people wanting to get long Bitcoin getting long sub-regulated vehicles, or dangerous Bitcoin proxies (Paypal CFD, for examples).

....why do you say "CFD"? paypal isn't running a CFD market. that would be illegal in the USA. having obtained a bitlicense (which requires 100% reserves) and using a NY licensed trust company (paxos) for custody, they actually appear to be more tightly regulated than any american exchange on the market.

When an ETF will get approved in the US (in Europe we have something very similar, BTCE) Grayscale will see massive outflows in that new vehicle. Hopefully it will be not relevant for the underlying.

i reckon it'll hurt GBTC holders, who will see that giant premium disappear, but i don't see why it should have a major effect on the rest of the market.

an ETF approval on the other hand---that might generate some hype, and with hype comes higher prices.

[leea-1334]

To show how relevant Grayscale (and by proxy, institutional investors) are starting to become in Bitcoin, in the past 3 years Grayscale has bought about 24% of all the newly mined bitcoin during that time. This is just a single bitcoin investment fund, and the vast majority (about 80%) of that buying by Grayscale the past 3 years was done this year.

Grayscale alone is now buying far in excess of how much Bitcoin is being mined, meaning, they and other institutional investors just now starting to get into Bitcoin are going to be eating up the supply of anyone else selling: retail investors, the old breed of whales, etc. And they are gonna be eating it up fast. In the next couple years we should expect several million bitcoin to be sitting the wallets of corporations and investment firms not even counting Grayscale, with Grayscale alone going over 1 million Bitcoin at some point next year and likely hitting 2 million in the next few years.

I mean hell, a single company, that's only worth $3 billion now, and was only worth $1 billion when it started buying Bitcoin this summer, now owns 70,000 BTC by itself! Granted, that is the one example of an institutional investors actually FOMOing in, but since they did it early its FOMO in a positive way where it's just a great investment with essentially zero risk.

Are they actually buying real Bitcoin, by the way? As in, they are owning and controlling the actual private keys to this BTC? Because if so,,, then yes it is truly relevant and people can even trace the BTC (I guess?). But if not,,, it is as relevant as all those exchanges that trade derivatives with cash settlement, right? As in, no effect;)

[fillippone]

....why do you say "CFD"? paypal isn't running a CFD market.

I use the expression CFD because , even if those aren't technically CFD, and maybe as per BitLicence are 100% backed by real bitcoins, for the users are actually CFD: you can only hodl them and sell for the difference. You cannot spend them, you cannot transfer them, you cannot do anything. You also have a credit risk toward PayPal. Thus, are more similar to a CFD than a real Bitcoin, in my opinion.

i reckon it'll hurt GBTC holders, who will see that giant premium disappear, but i don't see why it should have a major effect on the rest of the market.

an ETF approval on the other hand---that might generate some hype, and with hype comes higher prices.

I am just being overcautious here.
An ETF approval would generate a massive outflow from Grayscale (i.e. selling pressure) to switch to the ETF.
My guess is that this selling pressure would be more than offset by the buying pressure on the ETF from those who switched, and presumably would operate on a contextual way, and the general public buying the ETF like there's no tomorrow.

[fillippone]

OK....according to the article below (link) the following below really caught my attention.

https://www.investopedia.com/grayscale-trust-gbtc-is-key-to-bitcoin-price-jpmorgan-5093550

quote:

JPMorgan's strategists write that the inflows into GBTC "are too big to allow any position unwinding by momentum traders to create sustained negative price dynamics." In other words, investor enthusiasm for GBTC shares is a determinant of Bitcoin's price trajectory, and other Bitcoin traders do not possess sufficient market share or Bitcoin holdings to influence a correction in the cryptocurrency’s price.

Hey, I managed to put my greasy hands on that report: you can read the relevant part here:
Wall Street Reports On Bitcoin: JP Morgan Flows & Liquidity

A very interesting read indeed. And overall a nice 540° turn for JPM

[philipma1957]

OK....according to the article below (link) the following below really caught my attention.

https://www.investopedia.com/grayscale-trust-gbtc-is-key-to-bitcoin-price-jpmorgan-5093550

quote:

JPMorgan's strategists write that the inflows into GBTC "are too big to allow any position unwinding by momentum traders to create sustained negative price dynamics." In other words, investor enthusiasm for GBTC shares is a determinant of Bitcoin's price trajectory, and other Bitcoin traders do not possess sufficient market share or Bitcoin holdings to influence a correction in the cryptocurrency’s price.

unquote.

OK...I get it, but one wonders how much they are gonna push this price pump of Bitcoin until that 'burp' and are FULL! Or hell, is GrayScale just 'ahead of the curve'

as they have been all year, and simply ahead of another FOMO/ATH run of other investment giants also waiting to cannonball into the Bitcoin pool?

So the question becomes, is this gonna be another run up to around $50K Bitcoin into 2021 as everyone piles in? Or is this simply the top now due to 'mainly'

ONE buyer of FOMO in mass: ie GrayScale Trust?

Well, what do you think, how far will GrayScale Trust go on all this, and/or will other investment giants jump in as well?

Consider taking the poll here.

Brad


  

More will invest. Norway purchased 2 usd worth of  for every citizen about 2 x 5 mill = 10 mill.

European Union is 450 mill people. a simple 0.5-1.0 % rise in vat sunk into btc for all 450 million is not the stupidest idea in the world.

That would mean a true to the moon move of epic size.

Here is an old document
http://stics.mruni.eu/wp-content/uploads/2013/06/209-222.pdf

vat in the whole union is huge so if combined vat is moved up just a bit to invest in a European Union hedge fund. BTC could go nuts maybe even as far as Saturn fuck the moon or mars.

[exstasie]

Yup absolutely it's the main fund. Still very impressive (though does Bitgo custody for big clients? Cuz I just read they have $16 billion of crypto as well which is the same size as Grayscale, though maybe that's different because they are just custodying for clients, sort of like other platforms aimed at institutional players - like Coinbase I'm pretty sure has somewhere around that as well).

Yep, Bitgo does custody. I think they are the second biggest in the industry, behind Coinbase, who handles custody for Grayscale.

I expect in the next few years we will see funds come to existence that also pick up hundreds of thousand of btc each. By the time there are better options on the table though GBTC might have close to 10% of all the bitcoin in existence up to that point!

I guess a lot depends on timing. I have a feeling an ETF approval will come sooner than you think, given how quickly the regulatory landscape is changing and the level of institutional interest.

As a contrarian, I also look around and see how nobody cares about or expects an ETF anymore, and wonder if that means it's actually close this time. (As opposed to 2017-2018, when everyone was on the edge of their seats waiting)

Yeah agreed an ETF should make GBTC obsolete, and an ETF would be open to everyone equally so I would assume it would eventually grow to be larger than GBTC. ETF is when you get normal people throwing a couple percent of their retirement portfolio into Bitcoin.

Not just that but institutions. ETFs are one of the major ways large institutions access markets these days, as opposed to taking physical custody of assets.

[figmentofmyass]

....why do you say "CFD"? paypal isn't running a CFD market.

I use the expression CFD because , even if those aren't technically CFD, and maybe as per BitLicence are 100% backed by real bitcoins, for the users are actually CFD: you can only hodl them and sell for the difference. You cannot spend them, you cannot transfer them, you cannot do anything. You also have a credit risk toward PayPal. Thus, are more similar to a CFD than a real Bitcoin, in my opinion.

hmmm, ok. when you said CFD the first thing that popped into my head was "liquidity problems" because the point of CFDs is to offer access to high leverage exposure to the underlying asset in a segregated (low liquidity) market. paypal should not have any such liquidity problems if they are fully backed and source their coins from the spot and OTC markets.

you were saying the SEC would be forced to acquiesce on an ETF because such instruments are dangerous, but what makes an ETF fundamentally more safe? just because it would have SEC oversight rather than NYDFS oversight?

I am just being overcautious here.
An ETF approval would generate a massive outflow from Grayscale (i.e. selling pressure) to switch to the ETF.

but it would only be selling pressure on GBTC, not the spot market. just like there is huge buying pressure now and that has created a big premium, huge selling pressure would destroy that premium, or even create a discount.

[davis196]

I don't think that the Bitcoin bull market is caused by Grayscale only.Perhaps there are other big players(institutional investors and crypto whales),who are staying in the shadows and buying BTC,while Grayscale stays in the spotlights and gets all the attention from the mainstream media.
The Bitcoin price went from 19K to 28K USD in one week,which isn't sustainable growth,if you ask me.
This is a price bubble,caused by FOMO and this bubble will burst sooner or later.I don't know who or what caused that bubble,Grayscale is only one of many factors.

[fillippone]

I don't think that the Bitcoin bull market is caused by Grayscale only.Perhaps there are other big players(institutional investors and crypto whales),who are staying in the shadows and buying BTC,while Grayscale stays in the spotlights and gets all the attention from the mainstream media.
The Bitcoin price went from 19K to 28K USD in one week,which isn't sustainable growth,if you ask me.
This is a price bubble,caused by FOMO and this bubble will burst sooner or later.I don't know who or what caused that bubble,Grayscale is only one of many factors.

I just made a sum of Grayscale quarter on my Thread. You can read it here:

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


Regarding your opinion of BTC price as a bubble, I kindly disagree: How can something be defined a bubble if it is only the 106% of the model that has been forecasting the BTC price with a 95% r^2?

[exstasie]

So has Grayscale halted buying of BTC for the time being (lock out period ended) or not?

Cuz about a week before Christmas I read articles that they were at the end of their 6 month lock out period for investing and so has halted investments (for like the next few weeks?), but then on like dec 23rd I saw news that the previous day Grayscale had purchased 12,000 BTC in one day. Then after Christmas I read an article in which the author was arguing January is when we could get a price correction because from what I could tell he was saying Grayscale won't be adding new Bitcoin investments from Dec 29th until beginning of February.

Does anyone actually know if Grayscale is currently taking an investment break between their lockout periods right now or is their Bitcoin Trust currently open for investment?

Fillippone and I were speculating about this:

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.

I've been keeping an eye on outstanding shares, and inflows do appear to have completely stopped as of 12/24.

At this point I'm inclined to say all investors, old and new, are cut off. I suppose that's a temporarily bearish factor for the market, but it doesn't seem to matter. Onto $30K it is......

[thecodebear]

So has Grayscale halted buying of BTC for the time being (lock out period ended) or not?

Cuz about a week before Christmas I read articles that they were at the end of their 6 month lock out period for investing and so has halted investments (for like the next few weeks?), but then on like dec 23rd I saw news that the previous day Grayscale had purchased 12,000 BTC in one day. Then after Christmas I read an article in which the author was arguing January is when we could get a price correction because from what I could tell he was saying Grayscale won't be adding new Bitcoin investments from Dec 29th until beginning of February.

Does anyone actually know if Grayscale is currently taking an investment break between their lockout periods right now or is their Bitcoin Trust currently open for investment?

Fillippone and I were speculating about this:

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.

I've been keeping an eye on outstanding shares, and inflows do appear to have completely stopped as of 12/24.

At this point I'm inclined to say all investors, old and new, are cut off. I suppose that's a temporarily bearish factor for the market, but it doesn't seem to matter. Onto $30K it is......

Ah yeah ok. I deleted my post that you quoted once I went over to the other Grayscale thread and saw that chart that showed investments stopped after Christmas Eve. I guess the articles I saw a week before that meant the trust was about to stop investments but didn't make that clear.

I think when this happened in June they closed down investments for a few weeks, so I'd guess they will open it back up late January perhaps.

But yeah certainly impressive that in the week since Grayscale stopped investing the price went from $24k to $29.9k as of right now!

If there is going to be a correction in price soon I would expect it this month. Once Grayscale opens back up in a few weeks it's gonna be real hard to get anything other than quick bear traps when they are adding hundreds of millions of dollars of Bitcoin every single week!

[RealMalatesta]

I think when this happened in June they closed down investments for a few weeks, so I'd guess they will open it back up late January perhaps.

But yeah certainly impressive that in the week since Grayscale stopped investing the price went from $24k to $29.9k as of right now!

If there is going to be a correction in price soon I would expect it this month. Once Grayscale opens back up in a few weeks it's gonna be real hard to get anything other than quick bear traps when they are adding hundreds of millions of dollars of Bitcoin every single week!

I have always said the same thing, grayscale buying bitcoin does help increase the price a bit, but the real fact is that people are bullish on bitcoin and instead of the direct result of grayscale buying, the "news" of grayscale buying impacts the market a lot more if you ask me.

It is normal for financial companies to not make big moves on holiday break, from around 24th or so to few days into new years they usually do not make big moves, because its holiday time and they probably want to have fun too but at the end they will get back and considering we have increased even when they were gone, when they come back and make tens of even hundreds of millions of dollars worth moves, we are probably going to skyrocket even higher, I am expecting about 50k per bitcoin until this spring (or April latest) because they put a lot of money in, and we put a lot of money in because of what they do as well so its double dipping.

[adaseb]

I think yesterday, after the $30K wall was breached there was about $1,500,000,000. Yes thats the right amount of zeros. $1.5Billion worth of outflows from Coinbase. It looks like some kind of OTC custody buys which are sent to cold storage.

I am assuming this is not Grayscale however you never know. Seems like some huge fund decided to invest over a billion dollars worth. I am sure some time this week we will find out who it was when they decide to anounce it publicity on CNBC.

Either way, seems BTC is going through a supply side liquidity crisis, looking at order book depth, there is very little offers on the ask side.

[Poker Player]

Either way, seems BTC is going through a supply side liquidity crisis, looking at order book depth, there is very little offers on the ask side.

I think this is the key factor of what we are seing.

I don't remember exactly now, but someone responded to a comment of mine about FOMO in another thread that FOMO is a psychological concept and that institutional investors are guided by rational arguments, rather than by emotions, which would be more typical of the masses.

But perhaps we may be witnessing an institutional FOMO based on rational arguments if the institutions foresee an increase in demand. Institutional demand today is already eating up all bitcoins newly mined. So, perhaps it is better to buy now than to buy more expensive later.