When we talk about the accumulation of crypto-assets, only one corporation comes to mind this year – Grayscale Trust. In 2020 alone, Grayscale has accumulated more than 300,000 BTC, while also introducing a new digital asset trust associated with Litecoin.
In fact, according to reports[1], the firm has registered over $1 billion in inflows in Q3 of 2020 for its crypto-investment products. According to Grayscale, funds have continued to flood in from institutions, accounting for 81% in Q3 of 2020.
While on the surface this means that institutional interest in digital assets is consistently improving, a lot of information does not meet the eye.
In order to better understand the dynamics, let us take the example of Litecoin.
Did Grayscale’s Litecoin Trust really do as well?
While Litecoin proponents may not like the sub-heading, we need to follow the facts. Grayscale reported that its Litecoin Trust performed the best this quarter, estimating that it noted a whopping 1800% increase in inflows on a quarter-to-quarter basis.
While on its own Litecoin is a legitimately proven crypto asset, why would an institutional investor inject capital in an asset that has risen to only $49 from $31, since the start of 2019? In percentage terms, it is a significant number, but its 2019 high was $142 and during a largely positive 2020, Litecoin has not even managed to cross the $100-threshold.
A possible explanation here is that rather than focusing on Litecoin’s growth, investors are possibly more interested in Grayscale’s fat premiums.
Be it LTC, BTC, or BCH, investors are only eyeing premium
While a detailed breakdown is listed here,[2] in this article, we will briefly explain where the capital of these institutional investors flows into.
When investors put in money for Bitcoin Trust or Litecoin trust,
