Thread by @lawmaster

1/ I normally never post bullish stuff unless I think it’s justified with data. Well, today might be the day. “Institutions are coming” has been the never-ending story for the last 4 years. Let’s look at some GBTC data.

theblockcrypto.com/2019/05/13/ins…

2/ GBTC is a good indicator of institutional interest because more than 70% of investments come from institutional investors. Only qualified accredited investors can invest directly in GBTC with a minimum investment of $50,000.

3/ GBTC gives investors an opportunity to get exposure to bitcoin through a traditional investment vehicle and charges a 2% annual fee for it. And it's a great business. According to my estimates, Grayscale has collected $52 million in fees from GBTC in the last three years.

4/ As bitcoin jumped to 9-month high, growing by 135% since December 15, the price of GBTC has also rallied. Price of GBTC grew by 124% since early February and hit an 8-month high on Friday.

5/ GBTC’s assets under management (AUM), which in this case is just the value of all the bitcoins held in the fund, reached a 10-month high of $1.42 billion on Friday.

6/ By the end of April, Grayscale held 225,638 BTC or just about 1.3% of bitcoin’s circulating supply.

7/ The share of total bitcoin held in Bitcoin Trust has reached an all-time high in April.

8/ Bitcoin inflows, or the amount of bitcoin added to GBTC’s holdings, have reached an all-time high in April signaling an increase in institutional demand. In fact, bitcoin inflows in April (11,236 BTC) were approximately the same as in the previous four months combined.

9/ If we adjust the bitcoin inflows to USD, nearly $58.2 million was added to Grayscale’s holdings in April, which is almost as high as $60.8 million at the height of the bull market in December 2017.

10/ Another interesting metric is the relationship between the price of GBTC and the net asset value (NAV).

11/ GBTC’s share price trades higher than the net asset value meaning that investors pay a premium over buying BTC directly. This is because the price of GBTC is determined by supply/demand and the majority of investors prefer owning a security as opposed to ‘physical’ bitcoin.

12/ An increase in the GBTC premium signals a growing institutional interest. Historically, the premium has surpassed 100% in May 2017 and August 2017. The premium is currently 40% and has increased consistently since December, which shows a shift of the sentiment in the market.

13/ Similar trend can be observed by looking at the monthly traded volume of GBTC. While the volume in May is still considerably lower than in early 2018, there is a clear positive trend in the recent months.

14/ After evaluating the data of GBTC, it’s clear that the trend has reversed in the last several months. And institutional demand is clearly picking up.

15/ This research was part of what we call Genesis preview where we share research that out Genesis members receive daily. If you like this, please consider subscribing.

theblockcrypto.com/genesis/