Investment inflows into the world’s biggest publicly traded Bitcoin investment trust are pivotal to the price of Bitcoin (BTCUSD), according to a recent report from strategists at JPMorgan. The Grayscale Bitcoin Trust (GBTC), a Bitcoin holding company, has $13.1 billion assets under management (AUM) and is valued at more than $18 billion in OTC markets.
JPMorgan’s strategists write that the inflows into GBTC “are too big to allow any position unwinding by momentum traders to create sustained negative price dynamics.” In other words, investor enthusiasm for GBTC shares is a determinant of Bitcoin’s price trajectory, and other Bitcoin traders do not possess sufficient market share or Bitcoin holdings to influence a correction in the cryptocurrency’s price.
It is difficult to gauge the extent to which GBTC influences Bitcoin prices (or vice versa) because there is little transparency to the Bitcoin ecosystem. The thin liquidity of the cryptocurrency’s markets also adds to the problem. What is certain, however, is that GBTC shares benefit from a rise in Bitcoin price, enabling it to purchase more of the cryptocurrency for its holdings. Read more…..
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