Grayscale Investments has placed a temporary halt on new client signups for six of their crypto trusts. According to Decrypt reports, the company announced that it is not going to be taking on new business for its BTC (Bitcoin), BCH (Bitcoin Cash), ETH (Ethereum), Ethereum Classic, Digital Large Cap Fund, and LTC (Litecoin) trusts. Corey Law, Grayscale’s spokesperson, said that the company had gotten to a stage in its financial year to close its doors to public investors to provide an opportunity for private placement rounds. In a nutshell, these rounds of funding allow continuing investors to put up more cash in their liking project.
According to the report, the six month Bitcoin asset lockup applied to shares in the Bitcoin Trust bought in June 2020 has come to an end. This leaves investors with the option to withdraw their cryptocurrencies or invest the proceeds back into the trust.
A Great Year for Grayscale’s Trusts
Grayscale is one of the top-performing companies in its space. It has attributed its record-breaking quarters to a lot of research, preparation, planning, and good fortune. Because of the company’s prudence in all matters crypto and investing, it has continued to attract more people to invest with them. As of December 21, the company had more than $15.7 billion in total assets under management (AUM). Because of Bitcoin’s success, most investors are eyeing the Bitcoin fund, accounting for about 85% of the total fund. Over the last couple of months, the company purchased more than 160,000 Bitcoin. Although Bitcoin is showing some very stellar results, so is Ethereum trust. Over the last couple of months, the Ethereum trust has grown to around $1.8B, a far cry from less than a billion during the start of the year.
According to this report, the company had impressively raised a whopping $1 billion in 2020’s Q3 alone. And according to the company, is the largest capital inflow since the company began. After the company halted activity in the six crypto funds, the only options left on the platform are XRP (Ripple), ZEC (Zcash), and ZEN (Horizen). Although these altcoins are nowhere nearly as valuable as bitcoin and Ethereum, they are gaining value fast and have high volatility rations that are key to making money in this business.
Repercussions of the Halt
After the company unveiled the news, strategists and analysts from renowned investment bank JP Morgan came out to properly. This is to give an analysis of what this move means for the market as a whole and who else could be affected by their action. Quantitative strategists at the bank led by Nikolaos Panigirtzoglou noted that this move during a time such as this could affect the number of institutional funds invested in Bitcoin. As a result, the experts believe that this sudden halt can force a price correction in the market. As a result, it will cause the price of Bitcoin to drop just as it was seen in 2019’s second half.
The strategists reported that Bitcoin as an asset by itself could not be described as overbought. Therefore buying up more is the prudent move to make more so when the virtual asset is headed for success after success. The report also described Grayscale Investment bitcoin’s inflows as too big to allow a single position to be unwound by traders swinging to drive the prices down. Therefore, if any adjustment were to happen in the markets, it would only be temporary. After which the market would favorably respond to these funds.