Grayscale Wins Approval for First Public Digital Currency Index Fund

The DLC is Grayscale’s fourth publicly-quoted investment product, after Bitcoin Trust (OTCQX: GBTC), Ethereum Trust (OTCQX: ETHE), and Ethereum Classic Trust (OTCQX: ETCG). Eventually, Grayscale aims to list on the public market all ten of its investment products that are currently open to accredited investors. The new product is available to all investors with access to U.S. securities. 

Grayscale Investments has received regulatory approval to list what it calls the first publicly-traded digital currency index fund.

Following assent from the Financial Industry Regulatory Authority (FINRA), the Digital Large Cap Fund (DLC) will be listed on over-the-counter markets and trade under the initials GDLCF.

“The bitcoin trust is one of the most liquid securities on OTCQX market daily”, Grayscale managing director Michael Sonnenshein told CoinDesk.

“To our knowledge, this is the first diversified digital currency offering going on the U.S. public market.”

The idea behind the DLC is to give investors broad-based exposure to cryptocurrencies with one vehicle, Sonnenshein said. The fund has seen a 74.8 percent return, year-to-date.

The DLC exposes investors to the five largest cryptocurrencies at any time. The fund targets upwards of 70 percent of the digital currency market. As of Sept. 30, 2019, that was 80.3 percent bitcoin, 9.9 percent ethereum, 5.8 percent XRP, 2.2 percent bitcoin cash and 1.8 percent litecoin. To account for changes in cryptocurrency market caps, the fund is rebalanced on a quarterly basis, potentially removing existing digital assets and adding new assets. The fund is a passive investment vehicle that is not actively managed.

In addition to market cap, cryptocurrencies are weighed for their liquidity, operational requirements, and the availability of custodial solutions.

Grayscale, the oldest and largest digital currency asset manager with $2.2 billion assets under management, opened the funds to accredited investors in Feb 2018. There were about 3.2 million shares of DLC outstanding as of Sept. 30, 2019.

Investors buy shares in the private placement investment vehicle, which is backed by actual cryptocurrency. The valuation, made at 4:00 p.m. EST. each day, is based on the Digital Asset Reference Rate provided by institutional trading technology firm, TradeBlock.

Halving Sell-Off Temporary, BTC to Hit $20,000 by Year End, Says Billionaire Investor Novogratz

Bitcoin may not have pumped at the scale expected by many halving optimists, but Wall Street billionaire Michael Novogratz insists that the price will hit $20,000 by year-end.

The Galaxy Digital founder and chief executive officer on Monday told CNBC that bitcoin’s surge was inevitable in light of the record money printing by world central banks.

“The (Bitcoin) halving was quantitative tightening”, Novogratz explained, noting the new coronavirus inspired stimulus packages, which have pumped trillions of dollars into world economies overnight.

“It’s like an exclamation point on the macro story of why scarce assets like bitcoin should go higher. We will take out $10,000 and we will go to $20,000 by the end of the year. I feel real confident about it”, he asserted.

BTC fell as much as 1.4% to $8,620 in the wake of its third halving last night. Pre-halving expectations favored a significant price increase.

The cryptocurrency rose past $10,000 in the run-up to the event, which cut miner rewards by 50%, as investor sentiment reached fever-pitch.

However, the price dropped at least 15% over the weekend, briefly touching $8,250, in a sell-off some analysts have described as market manipulation by the so-called bitcoin whales.

At the time of writing, each BTC was trading at $8,800, up 6% over the last 24 hours, according to data from markets.bitcoin.com.

Novogratz said he did not participate in the sell-off, but reckons that Paul Tudor Jones, the billionaire hedge fund investor, entering the space signifies growing interest in cryptocurrency from institutional investors.

“We had a little bit of retail frenzy that got sold off. I would expect the market to hold at $8,000, $8,500 and to start trading right back up”, he predicted, adding:

We are seeing at our shop huge increase in interest in bitcoin from high net worth individuals, from funds. The Tudor (Jones) bitcoin news is very big news. It somehow takes the career risk of looking dump out of buying bitcoin.

Despite the post-halving slid, the outlook for bitcoin markets generally remains upbeat as the supply of news coins slows down.

Pantera Capital CEO Dan Morehead recently forecast that BTC had a 50% chance to spike to $115,000 by August next year, as fiat depreciates from stimulus packages.

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