Institutions purchase Litecoin’s LTC coin for a 1200% price premium as the demand for the asset among these investors on Grayscale Investments surged before the MimbleWimble upgrade and the fears of inflation are rising among the US investors so let’s find out more in today’s Litecoin LTC news.
According to the reports, institutions purchase LTC at a 1200% price premium on Grayscale Investments and the newly launched Litecoin trust. This led some of the observers on the market to question the bigger cryptocurrency which matured after the 2017 ICO mania. The Litecoin fund is a part of the new Grayscale crypto product options which is meant for accredited investors to gain exposure to cryptocurrencies. They are worth about billions of dollars and can be traded on the open market as an over-the-counter product.
Grayscale’s litecoin fund was briefly trading at a premium of over 1,200% on the underlying litecoin price, data produced by analysts at @ArcaneResearch showed. It's now down to a mere 600% premium https://t.co/8rfQ1P92oH via @ForbesCrypto
— Billy Bambrough (@BillyBambrough) August 30, 2020
Since the reports emerged, the premium for Litecoin went down to 600^ which is quite high compared to the asset spot prices on the cryptocurrency exchanges. Arcane research analyst Vetle Lunde talked some more about the high premiums:
“These trusts are based solely on single assets, and should thus not outperform its underlying asset over time.”
Lunde added that these funds’ premiums emerge as public investors purchase into existing shares of the fund and the original accredited investors are the sellers. The widely swinging premiums caused some major concern about Bitcoin and the rest of the market watchers that fear investors could be unaware of the premium that they are paying:
“Bitcoin exposure as an inflation hedge amidst the current financial instability seems to be a trending topic among some of the most renowned macro investors. This could make new investors more open to allocating some of their portfolios into Bitcoin.”
Premiums on the Grayscale crypto products show a wider trend in the institutional crypto industry which saw a huge number of high-profile investors such as the hedge fund manager Paul Tudor Jones and Michael Saylor, the Microstrategy CEO, that see Bitcoin as a “global hedge.” They believe that the decentralized nature of the digital assets means they are not affected by political action nor an economic one. The performance of the cryptocurrencies remains to be seen when the markets crash as they did by 40% in March when the market crash caught on the global equity markets.
The demand of cryptocurrencies is not stalling but Grayscale’s managing director Michael Sonnenshein said that while these funds’ shares are high, the asset manager has no control over the market:
“We’re creating the ability for these markets to happen. But it’s not something we’re directly making or facilitating.”
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