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The Investment Shutdown Is Temporary, As Grayscale Prepares For The Expiration Of A Lock-Up Period Of Shares Bought In June

One of the biggest crypto asset managers worldwide, Grayscale, halted all investment activities in six of its trust, including the Bitcoin and Ethereum Trusts. The lockdown of investments comes amid Bitcoin’s price reaching an all-time high and a constant bullish sentiment.

The digital funds that Grayscale halted are tracking the performance of Bitcoin, Ethereum, Bitcoin Cash, Ethereum Classic, Litecoin, and its Digital Large Cap Fund. The investment halts took effect as the period for selling newly-acquired shares of the Grayscale Bitcoin Trust (GBTC) comes to an end.

Corey Law, a spokesperson for Grayscale, stated that the investment company is “just at that point in the year where those windows the public window will be closing. And then the private window will be open.”

The only available cryptocurrencies that Grayscale has current access to, are Ripple (XLM), Stellar Lumens (XLM), and Zcash (ZEC). 

Grayscale Investments managed to offer shares of its Bitcoin Trust, GBTC, with as much as a 30% premium against the underlying Bitcoin. Despite the hefty premium, traditional investors are constantly buying shares from the Trust, because it’s publicly available on major stock exchanges. 

GBTC also mitigates the steep learning curve for holding, buying, transferring, and managing crypto assets in native blockchain-based wallet services or into smart contracts. 

Also, another possibility for Grayscale’s Bitcoin Trust is buying Bitcoin at a lower price. The lock-up period for investment shares bought in June 2020 is six months. Upon expiration, shares can be traded publicly to non-accredited investors who cannot invest in Grayscale’s Bitcoin Fund upfront. The move would put stress on GBTC’s price, and may effectively push the Trust’s price down. Further, taking into account the $11 billion in Bitcoin locked under the Bitcoin Trust, the price push may affect Bitcoin prices as well. 

If a scenario like the one noted above occurs, the downward push on Bitcoin would affect other cryptocurrencies, which means Grayscale may invest at a lower price. 

Historically, Grayscale did several investment halts, coinciding with the expiry of GBTC’s lock-up period. Since June 2020, Grayscale purchased over 161,000 Bitcoin, reaching 572,644 Bitcoin as of 22 December, data from Bitcointreasuries.org shows. 

Currently, GBTC trades at $30.83 per share. A share holds 0.00095 BTC, which translates into $22 as of press time. 

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