Grayscale is making a lot of noise with its crypto funds that allow for retirement accounts as well as other institutions to invest in Bitcoin, Ethereum, and Litecoin.
So far, the company has $12 billion in assets under management. This is a situation that Bitwise is looking to duplicate.
Both trade on the OTC markets. Like Grayscale, there is a premium for the fund over the cost of the underlying asset. Bitwise's crypto index opened at a 54% premium.
Grayscale initially scared investors off due to the premium. However, they quickly got over that when realizing that it could appreciate, providing a better return. Of course, the reverse is also true.
That said, Bitwise's premium might be a bit high, at least investors could be looking for a pullback.
Outside of this, we are moving closer towards having the resources to enable the bigger institutions to enter the market. While the Bitcoin (and crypto) world awaits approval on an ETF, these OTC funds will have to fill the void.
This is Bitwise's response after having their ETF application turned down last year.
Bitwise is also not offering different funds for each asset. They are combining all into one fund. Here is a list of its holding.
The benefit to this fund is that it allows firms such as Fidelity, Schwab, and TD Ameritrade to buy the shares. Like Grayscale, it allows for investors with retirement accounts to access the fund.
Based upon the amount of Bitcoin that Grayscale buys each week, it won't take a lot to put even more pressure on the largest token. At present, Bitwise pulled in $100 million, a drop compared to what of the other purchases taking place.
Of course, this is likely only to be the beginning. Bitwise will pull in more money as other investment houses start to realize it is available. Even if it doesn't compare to Grayscale, a couple billion under management will alter the crypto landscape. Where this does differ is that it will extend passed Bitcoin and help the alt-coins some.
When crypto advocates mention about all this just being the beginning, it is moves like that that they are referring to. The money Wall Street has is beyond comprehension. Trillions of dollars are available to enter the crypto industry. It is only a matter of time.
There will come a time when there are dozens of these types of funds, all using cryptocurrency as the basis for their shares.
This will put incredible buying pressure on the underlying assets. The reason is Wall Street has too much money to miss out on this opportunity.
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