After the launch of Grayscale LTC and BCH Trust, the high premium is reappeared

Summary:

This week, two Grayscale trusts began public trading, one for Litecoin and the other for Bitcoin Cash;

Both trust products currently trade at high premiums;

In this regard, Arcane Research stated that this is the only way for some retail investors to gain exposure to cryptocurrencies.

Just two days after Grayscale’s Litecoin and Bitcoin Cash trust began trading publicly, early investors in the assets have reaped huge profits.

The Grayscale Litecoin Trust has seen a 753% premium since its launch on Monday, according to data provided by Arcane Research. The Grayscale Bitcoin Cash Trust, launched at the same time, has a premium rate of 351%.

KingData Monitoring: Grayscale LTC Fund reduced its holdings by 323.93 Litecoins: According to data from KingData, Grayscale LTC Fund reduced its holdings by 323.93 Litecoins, and the total size of the fund’s holdings became 1,576,300 LTCs. (Note: Grayscale is not yet open for redemption, and the slight reduction may be due to the fine-tuning of the currency content-ethexc per share and the deduction of management fees.) [2021/8/31 22:48:02]

Arcane Research tweeted on Aug. 20 that the Grayscale Ethereum Trust had assets under management (AUM) of $837 million (1.8% of ETH supply). Compared with the fund's net value per share (NAV), the publicly traded shares of the trust fund (ETHE) currently have a premium rate of 93.7%. In June, that premium soared to more than 800%. While premiums have normalized, they are still high.

KingData Monitoring: Grayscale LTC Fund has accumulatively held 1.577 million LTCs: According to data from KingData, Grayscale LTC Fund reduced its holdings by 108.05 Litecoins, and the total size of the fund’s holdings became 1.5775 million LTCs.

Note: Grayscale is not yet open for redemption, and the slight reduction may be due to the fine-tuning of the currency content-ethexc per share and the deduction of management fees. [2021/8/20 22:25:29]

The Grayscale Litecoin Trust (LTCN), which was publicly traded on Tuesday, has seen a huge premium since its launch. Currently, LTCN is trading at a whopping 753% premium. The high retail demand for LTC exposure has brought handsome returns to early investors in the trust.

Data: Grayscale LTC Fund’s cumulative holdings are 1.393 million: According to data from KingData, Grayscale LTC Fund increased its holdings by 565.67 Litecoins, bringing the total size of the fund’s holdings to 1.393 million LTCs. (Please note that Grayscale is not yet open for redemption, and the slight reduction may be due to the fine-tuning of the currency content-ethexc per share and the deduction of management fees.) For more data or KingData download, see the link in the original text. [2021/2/17 17:23:37]

The trust products, which went live in April 2018, have attracted accredited investors (meaning very wealthy) who have so far paid out $29.2 million for the Bitcoin Cash Trust and $19.5 million for the Litecoin Trust. Grayscale takes care of paperwork and security.

Grayscale BTC Trust increased its holdings by 1,773 BTCs Grayscale LTC Trust holdings increased by 3.69%: According to Grayscale official data, on November 17, Eastern Time, Grayscale Bitcoin Trust’s holdings increased by 1,773 BTCs, an increase of 0.35%. The open interest has reached 515166 BTC. The holdings of Grayscale ETH Trust increased by 0.06% to 2,585,098 ETH.

At the same time, the total holdings of Grayscale LTC Trust was 815,494 LTC, an increase of 3.69%. In addition, Grayscale BCH Trust and ETC Trust both reduced their holdings by 0.01%, reducing their holdings for 3 consecutive days. [2020/11/19 21:17:47]

Then, on Monday, Grayscale made the trusts publicly tradeable. This means that the underlying assets in the trust will trade like shares. This allows buyers to invest in cryptocurrencies.

But if these fund shares represent the underlying cryptocurrency, why are they trading at a premium?

According to Arcane Research, one of the main reasons is that trading these funds is the only way for U.S. retail investors (i.e. regular users) to invest in cryptocurrencies through their 401(k).

Odaily Planet Daily Note: 401(k) retirement benefits plan is a tax-deferred retirement account plan created by the United States in 1981. It's called a 401(k) plan for short.

Arcane Research concluded: Therefore, the main drivers of the premium for Grayscale Trust products are:

1. Investors who purchased the trust outright seek compensation for the lock-up period.

2. Retail demand for crypto exposure through 401(k) savings is high as there are few other options.

3. Investors may not be aware of the premium.

Litecoin and Bitcoin Cash trusts are not alone in seeing high premiums. Grayscale’s Ethereum Trust is currently trading at a 93% premium, having traded at a premium of as much as 804% in early June. The Bitcoin Trust is currently trading at a premium of 23%.

“The premium indicates that public demand for crypto exposure is high, which in turn suggests that the market is ripe for ETFs,” concluded Arcane Research. But the Bitcoin ETF application has been repeatedly rejected by the SEC.

“In fact, within the existing framework, there are many ways to work with regulators on the asset class, but they are not ready to approve ETFs,” Michael Sonnenshein, managing director of Grayscale, said in an interview last month.

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