Grayscale Buys Enormous Amounts of Bitcoin As Libra Gets a Revamp: eToro Crypto Market Analysis


Global equity markets, such as the S&P 500 and FTSE 100, saw an average run last week, as market-moving news was few and far between. A similar run occurred in the three biggest cryptoassets, with Bitcoin, Ethereum and XRP all consolidating in price.

Grayscale Trust puts its trust into Bitcoin – and its miners

The $2.5 billion Grayscale Bitcoin Trust, managed by cryptoasset investment firm Grayscale, has reportedly been pursuing enormous amounts of Bitcoin purchasing since the halving in early May. The independent research estimates that the amount being bought is 150% of the Bitcoin currently being mined. So, who is selling, if Grayscale’s appetite is to be satiated, which it presumably is? It could be that there are some savvy retail investors out there, who entered the asset class early on in its inception, or in the lows this year, that are recognizing the big players entering the market and are looking to solidify their gains. As a result, the supply and demand of Bitcoin is currently at a happy equilibrium.

Goldman Sachs off Bitcoin

Goldman Sachs gave an interesting presentation on Bitcoin last week, in which it recommended against the use of the cryptoasset in investors’ portfolios and argued that Bitcoin and crypto in general should not be considered an asset class.

It was an illuminating read and highlights the importance of educating people to recognize and understand the uses of blockchain technology and cryptoassets. While Goldman Sachs gave its own reasons for Bitcoin not being an asset class, such as it not being an inflation hedge (in my view, subjective), doesn’t provide cashflow like bonds and doesn’t generate earnings in the way equities do, the cryptoasset community must do more to engage with these high level institutions and work with them to show them the benefits of cryptoassets and blockchain technology more widely. I believe contrary to what Goldman Sachs posts in its presentation – that cryptoassets offer no diversification benefit – there are a whole host of coins all with different use cases behind them.

Some interesting predictions were also in the market outlook section, which looks at approximate debt levels in the US in the medium term. One chart shows government debt is set to surge and reach as much as 150% of GDP by 2030. Despite being clearly skeptical of Bitcoin as an inflation hedge, Goldman Sachs has inadvertently highlighted the sort of situation in which Bitcoin is designed to thrive: massive government debt and fiscal stimulus.

Bitcoin 401k sounds ok

Gemini announced a new partnership this week. And not with itself. Bitwage offers a way for employees to have their salary paid in Bitcoin. It also allows employers to provide matching or profit-sharing contributions to its employees’ 401k accounts, which helps those companies that are struggling to meet the US government’s loan program conditions.

Dubbed the world’s first Bitcoin 401K, the Bitwage/Gemini initiative bridges an important gap between the traditional market and new crypto industry. This gives people the ability to invest in ‘actual’ Bitcoin for the long term, all the while keeping it inside a tax-efficient wrapper.

Facebook Libra gets a revamp

Another development in the Libra project as Facebook announced that it was rebranding the Calibra wallet to Novi, in a bid to ensure the on-chain payments platform is widely adopted once it’s launched.

One big question remains: will users need a government ID to be verified? If so, how will this work for the millions of unbanked who it was said the Libra project was designed to bring into the financial system?

Nevertheless, given most people have Facebook, WhatsApp or Instagram, this project is still an important step forward in the adoption of crypto. Users of these apps will be able to send cryptoassets to friends or family without having to input a 25+ alphanumeric wallet address. Making the process easy is of paramount importance, as it shows skeptics that cryptos can compete with and even improve on traditional payment processes.

This is a marketing communication and should not be taken as investment.

Simon Peters, eToro market analyst

This is a marketing communication and should not be taken as investment advice, personal recommendation, or an offer of, or solicitation to buy or sell, any financial instruments. This material has been prepared without having regard to any particular investment objectives or financial situation, and has not been prepared in accordance with the legal and regulatory requirements to promote independent research. Any references to past performance of a financial instrument, index or a packaged investment product are not, and should not be taken as a reliable indicator of future results.

All contents within this report are for informational purposes only and does not constitute financial advice. eToro makes no representation and assumes no liability as to the accuracy or completeness of the content of this publication, which has been prepared utilizing publicly-available information.

Cryptoassets are volatile instruments which can fluctuate widely in a very short timeframe and therefore are not appropriate for all investors. Other than via CFDs, trading cryptoassets is unregulated and therefore is not supervised by any EU regulatory framework. Your capital is at risk.

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