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Does Grayscale have enough clout in the cryptocurrency market to sway the price of Bitcoin?


The reopening of Grayscale services to investors on January 13 caused the price of Bitcoin to skyrocket almost 20% in 48 hours. The price is currently around $ 36,000, whereas it was previously trading at $ 34,000 or less.

Grayscale closes and reopens crypto products to new investors

Grayscale is a digital currency investment services company providing market information, investment exposure, and investment products to the developing digital currency asset class. On December 21, the company announced that it had temporarily stopped accepting new investors in six funds, including Ethereum Trust and Bitcoin Trust. Even with this temporary closure to new investors, Grayscale would continue to raise additional capital from existing investors until it reopened to new investors.

Grayscale reopened several of its cryptocurrency products to new investors on January 12, among Bitcoin. During this time, the investment company added 4,618 BTC to its portfolio at a current value of $ 182 million. Its crypto portfolio is now $ 27.6 billion, when it adds up to the $ 3.3 billion that was acquired in the last quarter.

More cryptocurrencies, including Bitcoin, have seen a price surge since January 13. Consequently, the entire cryptocurrency market has added $ 137 billion, making it surpass the $ 1 trillion market capitalization.

The available supply of Bitcoin is running low

The 2020 research revealed that institutional investors would increasingly use Bitcoin to hedge against inflation and currency devaluation. Companies like Microstrategy, JP Morgan, Goldman Sachs, and Grayscale have invested heavily in the crypto asset. It was projected that 90% of institutional crypto asset holders expected to invest even more in Bitcoin in 2021.

The increased demand for Bitcoin from these institutions has led to an increasing scarcity of the available supply of Bitcoin. eToro announced yesterday to its users that it expects to experience liquidity problems for its exchange platform. In an email sent to users, eToro said that the unprecedented demand for cryptocurrencies coupled with limited liquidity posed challenges to its ability to support BUY orders over the weekend.

Approximately 900 BTC is mined per day since Bitcoin halved in the middle of last year. However, Glassnode claims that, on average, only a third of those mined are sent to exchanges since July 2020. In the same period, Grayscale has bought around 224,930 BTC, which is more than 1,200 BTC every day. Along with the amount bought by other institutional investors, the amount of Bitcoin on offer is rapidly depleting.

Although statistics suggest that institutional investors have a role to play in the price of cryptocurrencies, not everyone supports it, especially since Grayscale's Ethereum Trust has not received the same interest in the last month. The Ether balance has dropped by 6036 since December 9, when it hit an all-time high of 2.94 million ETH. During this time, Ethereum has increased by over 122%, while Bitcoin by 116%.

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