Digital Currency Group (DCG), has purchased an additional bulk of Bitcoin shares from Grayscale. This is not the first time DCG will be investing a huge amount of funds in Grayscale Bitcoin shares.
Few days ago, towards the end of April, the crypto investment company purchased $193 million worth of GBTC. The company made it known that it will be adding to its GBTC position. To complement its previous investment, it will be adding a sum of $557 million worth of shares. This gives the group a total of $750 million worth of GBTC shares in its portfolio.
DCG expanded its Bitcoin shares with a general disclaimer. The crypto company made it clear that it is not under obligations to make this investment. It also added that, at the sole discretion of the company, the shares bought may be sold or liquidated at any time.
According to the announcement made today, DCG made it clear that the timing and size of its investment is dependent on some basic factors like the amount of cash available, the price of the shares and the general market condition.
Grayscale Bitcoin Trust
At the moment, Grayscale Bitcoin trust houses about 3% of the total Bitcoin in circulation. Grayscale is not a crypto exchange, rather it is a company that manages digital assets. Investors issue Bitcoin or USD to the company while the company gives investors an equivalent portion of its GBTC shares. The GBTC shares usually tracks the price of Bitcoin in the general market. The GBTC shares are traded on public stock exchanges.
The reason why a lot of institutional investors prefer this system to purchasing Bitcoin directly from centralized or decentralized exchanges is that closed-end trusts can be regulated by the Securities and Exchange Commissions. Additionally, large institutions can use tax-sheltered accounts to purchase shares.
The GBTC shares used have constantly traded at a relatively higher price than the general crypto market price, except for the past two months. In the past two months, the GBTC shares have been sold at a discounted price when compared to the general price of Bitcoin. While this may be an advantage for buyers of the stock, it is a disadvantage for sellers and large organizations that incurred debt to purchase the stock.