Grayscale, the World’s Biggest Crypto Hedge Fund, Now Manages Cryptos Worth $40B

  • Grayscale, the world’s biggest crypto Hedgefund is now worth over $40 billion
  • Since the start of 2020, the value of its holdings has risen by 12 times 
  • Grayscale made its initial Bitcoin investment in 2014 with an $8 billion fund

The world’s biggest crypto hedge fund, Grayscale has seen its holdings grow to over $40 billion within a short time frame. The hedge fund has seen its value increase by nearly twelve times since the start of 2020.

In January, the financial giants announced that they will be dissolving its XRP trust, following the SEC lawsuit against XRP. Since then, there has been more focus on Bitcoin trusts on Grayscale.

A bulk of its massive crypto-assets comes from $33.1 billion in the coffers of Grayscale Bitcoin Trust. Bitcoin’s incredible price rally accounts for Grayscale’s meteoric increase in value and with Bitcoin currently pegged at $51,000 and rising, we could see more gains by the hedge fund.

Grayscale’s: Largest Crypto Hedgefund in the World

Grayscale prides itself as a trusted authority on digital currency investing with a wife and diversified asset class. Located in New York, the firm came into Bitcoin Investment Trust in 2014 and received approval for eligible shares to trade publicly on the platform.

Grayscale refers to itself as a traditional investment vehicle, giving its members shares following the size and value of the investment. It goes on to provide a regular structure for financial, tax advisers, and shareholders to easily transfer their estates under estate laws.

Tesla Is Not The First Corporation To Make A Huge Bitcoin Investment

Grayscale’s Chief Executive Officer, Sonnenshen in an interview with CNBC said that in fact, Tesla was not the first corporation to invest in a large volume of Bitcoin. He stressed that the hedge fund had already sunk roughly $8 billion in Bitcoin investment way back in 2014.

This initial Bitcoin investment has appreciated bringing the total balance of Grayscale’s holdings to over $40 billion. The CEO advised that more firms should strive to follow the example it has set and make more institutional investments in crypto-currencies.
He stated in the Squakbox interview, “You’re going to see a lot of other visionary leaders and disruptive companies actually realizing it has really moved from why to why not.”

On The Flipside

  • Grayscale is the most dangerous way to own BTC, says Andrew Left of Citron Research.
  • Steeper declines in the price of Bitcoin may see the shares of Grayscale gave a major slump.
  • Premium paid by investors in hedge funds are the highest anywhere in the financial industry, experts warn.

Brief Primer on Hedgefunds

Hedge funds are pooled investment funds that trade in relatively liquid assets and is likely to always make use of intricate trading strategy and risk management techniques. Hedge funds typically pay their investment manager a certain percentage of around 2-5% of the value of funds.

Notable hedge funds include BridgeWater Associates, George Soros’ Quantum Group of Funds, Nextgen America amongst others. Typical techniques used by hedge funds include global macro, directional, event-driven, and relative value arbitrage.

Grayscale is one of the hedgefund championing the pooling of funds to trade cryptos in large volumes. With its soaring value, we could see traditional hedge funds diversify their holdings from stocks, futures, and currency trading to trading a range of crypto-currencies.

This article is for information purposes only and should not be considered trading or investment advice. Nothing herein shall be construed to be financial legal or tax advice. Trading Forex, cryptocurrencies, and CFDs poses a considerable risk of loss

Author

Milko is a DailyCoin reporter, mainly focused on Ethereum (ETH), Cardano (ADA), and their founders (Vitalik Buterin and Charles Hoskinson). Milko is an avid follower of crypto and blockchain technology and has written thousands of articles on the subjects. He finds joy in transforming complex issues into written content that anyone can understand. Milko has used and analyzed numerous exchanges, such as Coinbase, FTX, and Binance. He also closely follows all of the latest news around the largest decentralized exchanges (DEXs).