Grayscale Review: The Big Shark In The Crypto Industry
One of the biggest and most famous crypto investment funds today is Grayscale. This is a very reputable company that has many SEC-approved investment products. Therefore, any coin that Grayscale chooses to invest in is always a sign that it is a good coin with a lot of potential for future development. But what exactly is the Grayscale Fund? What coins are included in the Grayscale Portfolio 2023? Let’s learn details about this project with Coincu through this Grayscale Review article.
What is Grayscale Fund, and what is it investing in?
The goal of the Grayscale fund is to facilitate crypto investment for all in the United States, which is legally regulated by the SEC.
The Grayscale Fund provides financial means for new investors to enter the cryptocurrency market in the most convenient way. Here are some benefits:
- Users can invest in cryptocurrencies by buying shares/certificates on the exchange, just like you buy fund certificates or ETFs on Vietnamese exchanges.
- Grayscale products are accessible directly on the platform or through an IRA account.
- Grayscale will keep crypto assets safe and always report regularly to investors.
- Grayscale advisors will assist investors in answering investment questions.
Who created Grayscale Investments?
The founder and CEO of Digital Currency Group (DCG) is Barry Silbert. It is known that DCG is the parent company of Grayscale, Coindesk, TradeBlock, etc.
Prior to that, Barry was the founder of SecondMarket, which was later acquired by NASDAQ in 2015. As can be seen, Grayscale is led by an experienced founder who currently manages many leading companies related to digital assets.
Barry rarely uses Twitter, but every time Barry posts a tweet, it gets a lot of attention. Barry started a Bitcoin hedge fund in 2013 with $2 million in initial capital, allowing him to single-handedly shape the early crypto market.
Recently, because the collapse of FTX implicated Genesis Trading, a subsidiary of Genesis Global also owned by DCG, Barry was sued and criticized by the CEO of Gemini on social media platforms. Now, the Grayscale Review article will learn about how GBTC works.
How does GBTC work?
How GBTC works
The general operation process of GBTC can be encapsulated in the following steps:
- First, Grayscale invited a private group of wealthy investors to contribute capital. This fund will then be used to buy a large amount of Bitcoin.
- Next, Grayscale put the GBTC fund on public stock exchanges. This means that anyone can trade GBTC shares.
- In the market, the fund’s shares will reflect the Bitcoin price. However, it is adjusted to a relative level. Because stock prices are influenced by many other factors.
Simply put, a trader who owns GBTC shares indirectly owns Bitcoin. GBTC makes a profit from the collection of the fund’s management fees. In addition, another source of income can come from cryptocurrency trading. However, this year, GBTC continuously increased the proportion without any move to sell off assets.
On the market today, GBTC is the only stock that calls for investment through buying Bitcoin. Thus giving absolute advantage in the field of activity. This makes it possible for GBTC to charge a higher fee than the common ground. At the same time, GBTC is also favored by major financial institutions in investing in Bitcoin through third parties.
No one in the world gives anything to anyone. And the funds are not free for investors either. Grayscale Investment Trust charges an annual management fee of 2% of assets. This is a relatively high management fee to pay. By comparison, gold ETFs charge only 0.25% per year to invest in gold stored in vaults. You may not have thought to preserve Bitcoin is much more difficult than preserving gold bullion.
Although there are now competitors emerging, Grayscale has little reason to cut fees. In 2020, the price of Bitcoin skyrocketed from 5,000 to 20,000 or nearly 400%; it is difficult for anyone to care about the small 2%. Certainly, owning a Bitcoin Investment Trust is a lot easier than buying digital currency on an online crypto exchange. GBTC offers this convenience with a premium price tag.
Grayscale’s main investment products
Currently, Grayscale has 14 trusts and 4 investment funds, 3 of which invest in cryptocurrencies. Grayscale’s key product, the trust – Grayscale Bitcoin Trust, was first launched in September 2013 under the abbreviated name GBTC. US users can invest in Bitcoin directly on the stock market through the purchase of GBTC.
That is, retail investors buy shares of a Bitcoin trust fund (specifically with the token GBTC). The stock price will be close to the Bitcoin price on the crypto exchange.
Through GBTC, investors own part of the shares of the Bitcoin pool. Literally, they hold stocks, not actual Bitcoins. Besides Bitcoin Trust, there are many other Trusts with the same operating principle as Bitcoin Trust (There are currently 14 Trusts in all – we will explain in detail below). Overall, the products revolve around popular crypto assets (top 100 by capitalization). Because these assets guarantee credibility, as well as low volatility.
In addition, Grayscale Investments also has a fund called Grayscale Future of Finance (symbol: GFOF) which is an ETF that seeks to invest in companies and technologies that shape the “future of finance.”
What coins does the Grayscale portfolio include?
Grayscale is currently investing in 14 different coins (as of January 30, 2023). Each coin is a separate fund and has been carefully selected by Grayscale Investments according to many criteria.
In addition to well-known coins such as BTC, and ETH…, Grayscale also invests in a number of projects such as:
- Grayscale® Bitcoin Trust
- Grayscale® Ethereum Trust
- Grayscale® Ethereum Classic Trust: born of a controversy that took place in the Ethereum community because of the 2nd Hard Fork at the 1,920,000th block of Ethereum.
- Grayscale® Litecoin Trust: launched in 2011, launched as an alternative to compensate for Bitcoin’s shortcomings: being “lighter” and “more in supply” than Bitcoin (BTC).
- Grayscale® Bitcoin Cash Trust: a famous Bitcoin Fork was born in 2017, with the purpose of wanting faster, cheaper Bitcoin to become a means of payment.
- Grayscale® Zcash Trust: a digital currency project using blockchain technology similar to Bitcoin but with improved features and more privacy and security with cheaper fees.
- Grayscale® Decentraland Trust: a virtual reality platform that runs on the Ethereum blockchain. At Decentraland, you can buy land, build, earn, and own it completely.
- Grayscale® Stellar Lumens Trust: an open-source distributed payment network used to connect banks and payment systems with users for the purpose of facilitating the trading of currencies and assets. Its coin is an XLM coin.
- Grayscale® Horizen Trust: a privacy-focused blockchain platform that is a fork of Zclassic, derived from a fork of ZCash. Horizen is scalable, with transaction speeds of up to 10 million TPS.
- Grayscale® Livepeer Trust: a decentralized video streaming network that allows the creation of live video streaming applications similar to Facebook or Tiktok’s live streaming feature.
- Grayscale® Solana Trust: a platform developed with the aim of solving three difficult problems of Blockchain: Decentralization – security – scale, and is currently being evaluated as an emerging technology platform. most active today.
- Grayscale® Chainlink Trust: a decentralized Oracle network, its mission is to act as an intermediary to help smart contracts (Smart Contracts) easily access external data sources securely.
- Grayscale® Basic Attention Token Trust: an Ethereum-powered Web 3.0 platform that aims to revolutionize the disrupted digital advertising industry by eliminating middlemen, third-party tracking, and anti-trust cheating.
- Grayscale® Filecoin Trust: provides a decentralized information storage solution, applying blockchain technology, allowing users to store their files at super competitive prices.
With the explosion of DeFi in 2021, it is not surprising that Grayscale also participates in this lucrative “piece of cake” with the Grayscale® Decentralized Finance Fund. When joining this fund, users only need to buy a certificate of a fund to be able to participate in investing in all Defi coins in the portfolio.
This fund was launched by Grayscale in July 2021, specializing in investing in the most prominent and potential coins of the Defi field, including:
- Uniswap (UNI): a decentralized exchange (DEX) built on the Ethereum blockchain and is currently the most famous Dex product today.
- Aave (AAVE): a fairly popular Defi coin, is one of the first projects that allows users to borrow, lend or earn interest through holding cryptocurrency.
- Maker (MKR): a decentralized autonomous organization (DAO), that allows anyone to borrow and lend cryptocurrencies through a smart contract and a peg with its stablecoin DAI coin.
- Curve (CRV): a decentralized exchange (DEX), but it is built for stablecoins and allows users to earn transaction fees to provide liquidity.
- Compound (COMP): is also a platform that helps people lend and borrow cryptocurrency, but has many features to help investors make money in crypto.
- Synthetix (SNX): a new financial primitive enabling the creation of synthetic assets, offering unique derivatives and exposure to real-world assets on the blockchain.
Conclusion of Grayscale Review
GBTC is a stock created based on the value of Bitcoin. It possesses the characteristics of a mixture of stocks and virtual currencies. From there, it brings outstanding advantages that an asset class does not have. The consideration of adding GBTC to the portfolio depends on the taste of each different trader.
Through the above article, Coincu hopes to provide general knowledge about GBTC to readers. If you have any questions or comments. Readers do not hesitate to leave them below. Hopefully the Grayscale Review article has helped you understand more about the project.
DISCLAIMER: The Information on this website is provided as general market commentary and does not constitute investment advice. We encourage you to do your own research before investing.
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