“Outrageous Demand” for Bitcoin & Crypto from Retirement IRAs
- Grayscale continues to add Bitcoin to its stash, currently holding 570,860 BTC.
- In the past six months, GBTC’s holdings have grown by 56% to represent more than 3% of Bitcoin’s circulating supply.
As we reported, Michael Sonnenshein, Managing Director of the Grayscale Investments, said the most extensive digital assets manager had seen inflows that “are now probably up 6x what they were last year.” Sonnenshein said in an interview on Thursday,
“It's some of the world's largest investors and the allocations that they're making are bigger than we've ever seen before and their time horizon for this is generally something over the medium to longer-term.”
This growing demand can be further seen in the premium that people pay to get exposure to digital assets through Grayscale.
GBTC shares are currently trading at a premium of more than 30%. This premium has been slowly grinding up since early October, when it was just around 6%. However, we are nowhere near the 132% premium people paid in March 2017. On-chain analyst Willy Woo said,
“Wow 33% GBTC premium, that's outrageous demand for Bitcoin via retirement IRAs.”
“If I was a Euro Pacific shareholder I'd be wondering why the company is not getting in on that obvious growth business. Like Kodak revolutionized photos until one day it didn't run towards digital.”
However, it’s not just Bitcoin that Grayscale users are after. The premium on other products is even higher than GBTC except for its BCH product, which is actually on a discount (-13%).
ETHE is trading at 170% premium, ETCG 43%, and LTCN at the most significant 2,259% premium. Trader and economist Alex Kruger said,
“When crypto heats up, premiums to Net Asset Value (NAV) for Grayscale products skyrocket.”
“Driven by dumb money buying Grayscale products from a brokerage.”
Grayscale is currently holding 2.94 million ETH, 948.34k LTC, 12.29 million ETC, 225k BCH, 35.65 million XRP, 18.94 million XLM, 192.7k ZEC, and 450.11k ZEN.
In an attempt to protect the average folk by restricting access to asset purchases, SEC has ended up creating “a racket where the many subsidize the few,” said Alex Kruger. Because primary issuance is for accredited investors, an average person has to buy in the secondary market to pay a premium.
The institutions that are buying GBTC do so directly from Grayscale at a 2% fee with a 6-month lock-up but gain a premium twice a year.
The crypto market has repeatedly pointed out that more competition and ETF getting approval from the US Securities and Exchange Commission will push these premiums down.