Adoption or Control? Grayscale’s Bitcoin Accumulation Debate
On the one hand, it is said to be bolstering its adoption. But, at the same time, it seems to be contributing to bringing Bitcoin closer to being a correlated asset to be controlled like any other on Wall Street even though there ought to be an ideological difference between them.
The reported continuous accumulation of Bitcoin by Grayscale Investment – now at 53,588 BTC since the halving according to unconfirmed figures – is raising questions even though it is expected to contribute to pushing the price of the top cryptocurrency up. The investment company reportedly added 19,879 BTC to their Bitcoin Trust since last week as against the 7,081 BTC minted by Bitcoin miners within the same period (making 39,544 BTC for miners since halving).
Its reported accumulation is assumed to not yet have a clear effect on the price though some say most of its Bitcoin were bought over the counter. Yet, reference continues to be made to the institutional investors’ propensity to increase Bitcoin’s correlation with assets on the stock market as evident during the March 12 slump which saw Bitcoin suffer one of its most quickest and biggest crashes in 24 hours (from $7,800 to $4,900 range) – almost in tandem with other assets on the stock market.
Grayscale touts itself as the largest digital currency asset manager with more than $4.2 bln in AUM across its family of products that provide investors exposure to the digital asset class. Its outlook seems to suggest a firm that’s seeking to enhance crypto adoption but it can’t be ascertained that its investors are actually into the top cryptocurrency because they believe in its potential or just seeking to cash in on its price volatility.
In the latter, in particular, the expected price increase cannot be considered organic and such could lead to Bitcoin price movement being stalled at some point when investors are not willing to pay more for it. While this could lead to a possible price reversal later, it also feeds the fear that more institutional investors owning Bitcoin could mean their edge to control its market and more people willing to sell their crypto in the event of a stock market slump.
The argument breeds mistrust which has always been one of the major factors against institutional investors for their capability to make it easier for big banks – whose deep pockets far exceeds that of crypto exchanges – to buy in and/or have control over the cryptocurrency market.
PayPal supporting #Bitcoin will be amazing for adoption, however, don't expect PP to change their policies on account closures. They're still a centralized choke point and the government will continue to commandeer the financial system for extrajudicial sanctions. Not your keys..
— Jesse Powell (@jespow) June 23, 2020
The mistrust was cited in the recent rrumoured plan by Paypal to enter the crypto space leading to skepticism.
Basically, it should push adoption far, if true, and even the price higher considering that two key happenings that may impact global economies are likely to unfold: a possible second wave of the Covid-19 pandemic being projected and the US election coming later in the year. However, as Bitcoin educator Jimmy Song put it, PayPal’s reported plan is a decade of coming to full cycle as the company that “froze the Wikileaks account and put #Bitcoin on the map back in 2010”; institutional interest in crypto from companies like PayPal does not rule out their desire for control over the space along the line.