Grayscale’s parent company and crypto investment firm, Digital Currency Group DCG plans to purchase up to $250 million of shares in Grayscale Bitcoin Trust. The trust runs by the digital asset manager Grayscale Investments, owned by DCG itself. For reference, each Grayscale Bitcoin Trust GBTC share is currently trading at $51.20.
DCG Bets Directly on Grayscale Bitcoin Trust
DCG will use cash on hand to fund its exposure to Bitcoin. It has a long track record of investing in companies across the cryptocurrency space, for example, Blockstream, Chainalysis, and Coinbase.
To a certain extent, DCG is following the trend of companies that are investing their cash holdings in Bitcoin. Taking an example of Cloud service provider MicroStrategy, which owns 91,064 BTCs worth $5 billion. Carmaker Tesla and payment company Square have also followed the suit buying $1.5 billion and $120 million BTCs, respectively. However, despite the wide exposure to the crypto industry as a whole, the firm is not aggressively purchasing Bitcoin from the open market.
DCG Invests in Bitcoin
After the announcement, an eye-catching bull run in the crypto-market has been observed. Bitcoin touched new heights of $56,400 for the first time in two weeks. This new rise has helped Grayscale to grow from $2 billion in assets under management at the start of 2020 to more than $42 billion as of yesterday.
DCG clarified that the authorization does not mirror immediate action to purchase the GBTC shares. Also, it does not compel the firm to buy any specific number of shares. The company also states that the order could be extended, modified, expanded, or even discontinued at any given time.
“The actual timing, amount, and value of share purchases will depend entirely upon a number of factors, including the levels of cash available, price, and prevailing market conditions,” the company added.
Apart from the institutional investment, the company has increased the involvement of accredited individuals, retirement accounts, and family offices.