Everyone is wondering why Grayscale suddenly stopped buying Bitcoins despite accumulating more than what was being mined some weeks ago.
With the way Grayscale bought BTC, many people wondered why but surprisingly, the momentum has been lost and it’s now three weeks since Grayscale bought any BTC.
Actually, Grayscale is expected to report to the SEC any BTC it buys by filling the Form 8-K. This file was meant to be filled weekly provided Grayscale Bitcoin Trust Fund (GBTC) bought any BTC. However, GBTC hasn’t been filling the form since June 25 when it bought nearly 20,000 BTC. In the SECOND QUARTER, GBTC’s rate of purchase stood at an average of $57.8 million weekly.
According to a Grayscale’s official, the company is still going to buy more and has just paused temporarily to solve some administrative issues:
“There was an administrative quiet period for the Grayscale Bitcoin Trust private placement. The Trust is now open for subscription as of Friday, July 10 at 4:00pm ET.”
Grayscale shows that institutional investors like Bitcoins
As a matter of fact, GBTC is not to be classified as a hedge fund that acquires crypto assets to sell them in the future when the price goes up. Rather, GBTC is compelled to buy BTC anytime people invest in its shares. One GBTC share is now worth 0.00095891 BTC.
From April to June this year, more than 80% of investments made in Grayscale was by hedge funds and other institutional investors. This makes it clear that institutions are interested in Bitcoins. This made Grayscale buy a high amount bitcoins:
“After Bitcoin’s halving in May, 2Q20 inflows into Grayscale Bitcoin Trust surpassed the number of newly-mined Bitcoin over the same period. With so much inflow to Grayscale Bitcoin Trust relative to newly-mined Bitcoin, there is a significant reduction in supply-side pressure, which may be a positive sign for Bitcoin price appreciation.”
Reason for the pause from institutional investors
There are some reasons to explain this. The first is that investments usually drop in July because it’s a time for a leave or holiday. Moreover, Bitcoin’s poor performance in the last few weeks could be another reason.
Bitcoin gained a bullish momentum after the March 12 crash (Black Thursday) and many people started investing again especially when they saw that the traditional markets still gave no hope to them. But from the beginning of May, Bitcoin has not made a particular decision on the direction to follow, thereby making traders uncertain about the action to take.