According to the latest statistics, the crypto space’s largest institutional player is none other than Grayscale Investments. It recorded another major milestone this week with its Bitcoin Trust. Kevin Rooke, a business and tech insider reported on Twitter that another 12,000 BTC had been purchased by Grayscale for adding to its Bitcoin Investment Trust. Rooke highlighted in his tweet that the single-day haul of the company eclipsed the 11,512 BTC that had been purchased by Grayscale over the course of the previous week, when Bitcoin had reached new all-time highs. According to the data provided by Bybt, the total Bitcoin holdings of the company have now reached the $13.7 billion mark.
This news came after the company had put a stop to investments in its crypto trusts. A Twitter user posted a screenshot showing that investors were no longer able to deposit funds into the trusts of the New York-based company for Bitcoin, Bitcoin Cash, Ether, Litecoin, and Ethereum Classic. As a matter of fact, the company also halted deposits into its Digital Large Cap Fund. The fears were immediately doused by Grayscale, as it explained to industry sources that they had only done so because a six-month lock-up period relating to the selling of recently bought shares in the Bitcoin Trust had come to an end.
An analyst from Jarvis Labs, Ben Lily stated in a report that the shares had been bought in June. According to Lily, these shares could have reduced the value of the Bitcoin Trust if they had been sold off to non-accredited investors in the open market. Since the Bitcoin Trust is a massive one, this sell-off would have dragged down the BTC’s market price as well. Hence, Bitcoin would have become more attractive to institutional players interested in buying it at a lower price.
Even though the analyst believes that Grayscale has the power to drive down the price of Bitcoin, it is worth noting that it is certainly not the only institutional player in the space. According to data posted by a Twitter user, a lot of major exchanges were seeing outflows of Bitcoin that went as high as 16,000 BTC. According to analysts, this is mostly because of institutional purchases and most of the Bitcoins purchased are being put into cold storage. A lot of people have noted the role played by institutions in creating a Bitcoin scarcity. Last month, a report had been published by Pantera Capital and the crypto investment firm said that the recent Bitcoin price rally was because 70% of all newly minted BTCs had been snapped up by companies, such as Square’s CashApp and PayPal.
As Bitcoin’s monetary policy is programmed to be deflationary, purchasing power will get a boost with improved adoption, which will fuel scarcity. Pantera claimed that the latter was already happening because institutional investors had flooded the crypto market. Basic economic principles indicates that when there is scarcity, an asset will automatically gain traction and become expensive, which seems to be happening to Bitcoin.