Grayscale Investments’ Litecoin Trust (LTCN) and Bitcoin Cash Trust (BCHG) shares trade at large premiums. For LTCN it is 753%, and for BCHG 351%, Arcane Research found.
The Grayscale BCH Trust was also launched this Tuesday, and has also traded at a large premium.
The current premium of BCHG is at 351%.
The premium has been falling since launch, indicating that the BCH demand among retail is not on par with the demand seen in LTC. pic.twitter.com/uI9OS6xYgV
— Arcane Research (@ArcaneResearch) August 20, 2020
Premium also trades on Grayscale Bitcoin Trust (GBTC) and Ethereum Trust (ETHE). For the former the premium is 23%, and for the latter 93.7%.
The Grayscale Ethereum Trust has $837 million worth of AuM (1.8% of the ETH Supply).
The publicly traded shares of the trust (ETHE) currently trade at a premium of 93.7% compared to the NAV.
In June, the premium soared above 800%. The premium has normalized, but is still high. pic.twitter.com/nh3nS95caj
— Arcane Research (@ArcaneResearch) August 20, 2020
Arcane Research explained how the premium is formed (the so-called premium). Accredited investors buy shares of Grayscale’s trusts in a private placement. After that they hold the shares during a lock-up period, and then begin selling on secondary markets to retail investors.
“Due to the absence of cryptocurrency ETFs, such trusts are often the only option for Americans to invest in cryptocurrencies within a 401(k) retirement plan,” the researchers concluded.
Some retail investors are unaware of the premiums at the time of purchase.
Trading of LTCN and BCHG on the secondary market started at the start of this week.
Last week Grayscale raised a record $217 million for its trusts. This was preceded by the launch of advertising on American television.
As of writing, assets under management stand at $5.9 billion. Of these, $4.903 billion are attributable to the Bitcoin Trust.
08/20/20 UPDATE: Net Assets Under Management, Holdings per Share, and Market Price per Share for our Investment Products.
Total AUM: $5.9 billion$BTC $BCH $ETH $ETC $ZEN $LTC $XLM $XRP $ZEC pic.twitter.com/SDZ1UVjrSn
— Grayscale (@Grayscale) August 20, 2020
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