The US Securities Exchange Commission today approved a filing by global investments and advisory firm Guggenheim to invest $500 million into Bitcoin via digital assets manager Grayscale.
According to the US SEC filing, Guggenheim submitted an amendment proposal on November 27, 2020, to allow the firm’s $5 billion Macro Opportunities Fund to gain exposure by investing 10% of its net asset value into Grayscale’s Bitcoin Trust (GBTC). The amendment said:
“The Guggenheim Macro Opportunities Fund may seek investments exposure to bitcoin indirectly through investing up to 10% of its net asset value in Grayscale Bitcoin Trust, a privately offered investment vehicle that invests in bitcoin. To the extent the fund invests in GBTC, it will do so through the subsidiary.”
Guggenheim as the 3rd Biggest GBTC Investor
As the largest digital assets management fund in the world, Grayscale currently has a $27.7 billion net assets under management (AUM) with GBTC accounting for 83% of the total at $22.906 billion.
Guggenheim net assets totaled $4.97 billion at the time of the filing, according to data provided by Fidelity, meaning that the fund could invest up to $497 million into Grayscale’s GBTC.
Fidelity now estimates the fund to be worth $5.581 billion which would allow Guggenheim to invest approximately $558 million into BTC via Grayscale. The investment would make Guggenheim the third biggest GBTC stakeholder with a 0.26% stake (1,671,951 shares) at the current price of $34.69 per GBTC.
Ark Investments Management and Horizon Kinetics Assets Management rank in first and second positions with 6,257,925 shares (0.98%) and 2,319,090 (0.36%) shares, respectively.
Is GBTC A Good Investment in 2021?
GBTC allows investors to gain exposure to Bitcoin in the form of a security. The downside to GBTC is that it trades at a massive premium of between 20-30% over the underlying value of bitcoin.
A recent report by Grayscale shows that in Q4 2020, GBTC recorded a return of 26.43% generally moving in line with the price of Bitcoin and therefore prone to wild swings when Bitcoin is highly volatile.
According to Investor Business Daily’s Michael Larkin, GBTC is not a stable investment right now and investors looking for good stock should study the stock market for other profitable companies.
“Those looking to invest in the cryptocurrency market would be best served waiting for a new buy point to emerge. Given the asset’s history of wild declines, investing at the moment could result in heavy losses.”