The Grayscale Bitcoin Trust has attracted significant institutional interest, reflecting growing confidence in cryptocurrency as an asset class. Among its largest holders is BlockFi, a leading crypto asset lending company, which holds approximately 24.24 million shares. Notably, traditional financial entities like the Rothschild family have also entered this market, signaling broader acceptance of digital assets within conventional finance.
Overview of Institutional Holdings
As of November 9, 2020, publicly available data revealed that 23 companies, through 29 institutional accounts, held shares in the Grayscale Bitcoin Trust. These holdings totaled 59.55 million shares, representing 11.55% of the trust’s total issued shares. It is important to note that these figures are based on SEC disclosures and are subject to change due to market activity.
The institutions involved include a diverse range of entities:
- Crypto asset lending firms
- Hedge funds
- Mutual funds
- Private wealth management companies
- Advisory firms
- Family offices
Breakdown by Account and Bitcoin Equivalent
Several institutions managed multiple accounts holding the trust’s shares. For instance, the mutual fund manager Horizon Kinetics held positions across five different trust funds and one closed-end fund.
Calculated at the rate of 0.00095299 bitcoin per share on November 9, 2020, the 29 institutional accounts collectively held the equivalent of approximately 56,753 bitcoin. BlockFi was the single largest holder, with its position equating to roughly 23,096 bitcoin.
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Key Institutional Holders
A closer look at some of the prominent organizations reveals the diverse background of investors entering the crypto space through this trusted vehicle.
BlockFi: The Leading Holder
Founded in 2017 by Zac Prince and Flori Marquez, BlockFi is a New York-based crypto asset lending company. It operates as a secured non-bank lender, providing USD loans to borrowers who use crypto assets as collateral. The company’s mission is to offer credit services in markets where access to simple products like savings accounts is often limited.
The founders brought substantial experience to the venture. Prince had a background in online lending at firms like Orchard Platform, while Marquez had extensive experience managing a large fixed-income portfolio.
Backed by major crypto venture capital firms, including Coinbase Ventures and Galaxy Digital, BlockFi had expanded its operations to over 44 U.S. states by late 2020. Its significant investment of 24.24 million shares in the Grayscale Bitcoin Trust underscored its strong belief in the long-term value of bitcoin.
Three Arrows Capital: A Crypto Hedge Fund
Three Arrows Capital is a Singapore-based cryptocurrency hedge fund established in 2012 by Su Zhu and Kyle Davies. The firm’s investment activities span a broad spectrum within the crypto ecosystem, including direct asset investment, DeFi, equity investments, and fund management.
As of November 9, 2020, Three Arrows Capital held 21.06 million shares of the trust, making it one of the most substantial positions and demonstrating a dedicated crypto-native strategy.
Horizon Kinetics: A Traditional Mutual Fund Advocate
Horizon Kinetics LLC serves as the investment adviser for Kinetics Mutual Funds, Inc. Founded in 1994 and becoming a wholly-owned subsidiary in 2011, the firm had approximately $5.14 billion in assets under management by mid-2020.
Five of its nine mutual funds held positions in the Grayscale Bitcoin Trust. Notably, for two of its funds—the Internet Fund and the Global Fund—the trust was the largest holding, comprising 21.3% and 11.4% of their portfolios, respectively. This allocation from a established traditional asset manager highlighted a strategic shift towards accepting bitcoin as a legitimate store of value.
Rothschild Investment Corp: A Symbolic Entry
The presence of Rothschild Investment Corp on the list was particularly symbolic. This firm, with a history dating back to 1908, represents the epitome of traditional, conservative finance. Its entry into the bitcoin market, however small, sent a powerful message about the asset’s growing credibility.
The company, which managed nearly $1.4 billion in assets for over 1,400 clients globally, held 24,500 shares of the trust. This was equivalent to just 23 bitcoin—a minuscule portion of its overall portfolio, which was heavily weighted toward traditional equities like Apple Inc.
While the financial value of its position was small, its strategic importance was immense. The move indicated that even the most traditional financial institutions could no longer ignore the potential of cryptocurrencies and were beginning to allocate capital to understand and gain exposure to this emerging asset class.
Frequently Asked Questions
What is the Grayscale Bitcoin Trust (GBTC)?
The Grayscale Bitcoin Trust is a publicly quoted investment vehicle that holds bitcoin. It allows investors to gain exposure to bitcoin's price movement without the complexities of directly buying, storing, and securing the digital currency. Shares of the trust are traded on over-the-counter markets.
Why are institutional investors buying GBTC instead of bitcoin directly?
Institutions often prefer GBTC for several reasons. It provides a regulated and familiar investment structure, eliminates the technical challenges and security risks of holding bitcoin directly, and can be held in traditional investment accounts like IRAs, which may not permit direct cryptocurrency holdings.
Does holding GBTC mean you own actual bitcoin?
Yes, each share of GBTC represents a fractional ownership of the bitcoin held by the trust. However, share prices can trade at a significant premium or discount to the actual net asset value (NAV) of the underlying bitcoin due to market supply and demand dynamics.
What does Rothschild's investment signify for the crypto market?
The investment by a firm like Rothschild, though small, is a strong symbolic endorsement. It signals to other traditional wealth managers and institutions that cryptocurrency is being seriously considered as a viable asset class for portfolio diversification, potentially paving the way for broader adoption.
How can I track institutional activity in GBTC?
Institutional holdings are disclosed periodically in filings with the U.S. Securities and Exchange Commission (SEC), such as Form 13F. These filings are made quarterly and are available to the public on the SEC’s EDGAR database.
Is investing in GBTC a good way to get exposure to bitcoin?
It offers a convenient way for certain investors, but it has pros and cons. While it provides ease of access, investors should be aware of the management fees and the potential for the share price to deviate from the NAV of the underlying bitcoin. It's crucial to compare it to other options like bitcoin ETFs.