Cryptocurrency
Demand Surges for Biggest Crypto Fund Amid Arbitrage Play
As reported on Bloomberg, “Grayscale Investments LLC generated a lot of buzz when its cryptocurrency trusts attracted more than $900 million — mostly from institutional investors — in the second quarter, nearly double its previous quarterly high and bringing total assets under management to over $4 billion. “While the surge in demand can be seen as a sign […]
As reported on Bloomberg, “Grayscale Investments LLC generated a lot of buzz when its cryptocurrency trusts attracted more than $900 million — mostly from institutional investors — in the second quarter, nearly double its previous quarterly high and bringing total assets under management to over $4 billion.
“While the surge in demand can be seen as a sign that large asset managers are finally embracing digital assets, many investors were likely taking advantage of one of the more popular arbitrage opportunities in crypto.
“’The Grayscale arb is a pretty common trade,’ said Kyle Samani, co-founder of Austin, Texas-based hedge fund Multicoin Capital Management LLC.
“Grayscale’s main Bitcoin and Ethereum trusts both traditionally trade at a premium to the value of the underlying assets, so a lot of hedge funds buy or borrow the coins on their own and contribute the assets in kind to the trusts, thereby creating more units of the trusts, Samani said. ‘If those shares trade at a premium to the underlying assets, the trade provides riskless profits.'”