BitMEX analysts believe that Black Rock and Vanguard could be interested in bitcoin. The firm notes that Grayscale products have flaws that could undermine their popularity.
Year 2020 has been one of the most positive years for Bitcoin Bitcoin. This is because the financial products of this cryptocurrency that come and go on the stock market. A recent BitMEX report reveals that competition in this market is escalating along with the price of the asset.
Data from BitMEX confirms the trend that was already seen in the institutional bitcoin market. Grayscale is leading in this market by positioning its products as investors’ favorites.
It is the publicly traded company that guards the most BTC, registering around 550,000 bitcoins in its vaults by the end of 2020, representing 2.6% of the total supply of bitcoins that the network plans to issue.
The company reported its highest asset growth in 2020, even though the Bitcoin Trust fund (GBTC US) debuted in 2013. The total assets in this period were $ 10.5 billion, according to BitMEX. It is the most successful bitcoin financial product that appeared on the stock exchange this year. Although 2020 was also relevant for being the protagonist of the launch of other specialized funds in this cryptocurrency.
Two German initiatives debuted this year: VanECK’s exchange-traded fund (ETN) and Deutsche Borse’s Bitcoin exchange-traded product (ETP). BitMEX researchers claim that these are two of the strongest products of 2020, even more so than Grayscale’s fund, and that they could become major market competitors shortly.
“These newly listed products are likely to gain considerable market share,” the report said. Besides these promising projects, BitMEX placed its aim on four other Bitcoin financial products that are also being in trade on the capital markets.
In this sense, the firm concludes that competition in this sector continues to increase and that in the future Grayscale could lose its leadership in the hands of entities with a long tradition in the market.
“If the price and popularity of Bitcoin continue to rise, inevitably, industry titans like Black Rock and Vanguard will finally join the game.” This forecast sustains its origin from the idea that while the Grayscale fund is quite popular, it is a flawed financial product with too many problems.
Grayscale’s Bitcoin Trust Sounds Good, but What Lies Beyond?
BitMEX researchers consider Grayscale’s financial products to be defective for their unusual asymmetry. The report notes that Grayscale allows users to create trust units with great ease but does not have any redemption mechanism. That is, no investor in this fund can exchange their units for bitcoin.
This means that Bitcoin Trust Grayscale works in one direction only. Investors can subscribe to trust units and buy bitcoins, but they can’t cancel those participation fees and receive bitcoins in return. The operator – which in this case is Grayscale – can always buy bitcoins but never sell them.
For some users, this practice brings many positive effects since it affects the increase in the price of bitcoin by holding it (keeping it deposited so that its value increases). However, it is limiting when investors want to gain more control over their money.
By Jenson Nuñez.
