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- It has been a remarkable year for cryptocurrency fund Grayscale Investment LLC as the total Assets under Management (AUM) touched $4 billion.
- A report claims that the trusts trade at a premium to the underlying assets i.e. Bitcoin and Ethereum.
In terms of performance, it has been a remarkable year for cryptocurrency fund Grayscale Investment LLC as the total Assets under Management (AUM) touched $4 billion. Record quarterly inflows of $388.9 million $110.0 million were broken by Grayscale Bitcoin Trust (GBTC) and Grayscale Ethereum Trust (ETHE) in the first quarter of 2020. A report claims that the trusts trade at a premium to the underlying assets i.e. Bitcoin and Ethereum. Hence, investors can easily make riskless profits known as arbitrage.
Cryptocurrency Funds are More Appealing
The mining of digital currencies requires a lot of investment on part of interested small investors. They lack the knowledge and expertise to carry out the process of mining for such currencies. Grayscale Investments LLC has simplified the investment process with cryptocurrency funds for Bitcoin and Ethereum. Several institutional investors comprise a majority of their holding. Furthermore, small investors can purchase shares through an exchange and make a fortune.
Moreover, the funds’ performance is directly linked to the price of Bitcoin or Ethereum, as the case may be. On the other hand, small investors are to lose most of their funds if the institutional investors plan to give up their holding in search of short-term gains. The ETHE is trading at $107.5 at the time of writing and a minimal sum to invest in crypto driven derivative vehicles.
Investors Lured by Exquisite features of GBTC and ETHE
Investments in the trusts have a certain tax advantage in certain IRA. Brokerage and investor accounts can benefit from the tax advantage they offer. Its shares are publicly traded in stock exchange OTCQX and are supported by several trusted service providers. The modern security features are robust with Coinbase Custody Trust Company LLC being the main cold storage provider.
Several competitors are present in the market like Squarecash who provide similar facilities. Moreover, the strong institutional demand has not affected the prices of digital currencies. Subsequently, Grayscale will continue to buy Bitcoin at a record pace to meet the market demand.
