Singapore’s Three Arrows Capital Is First Qualified Investor to Hold Over 5% of Grayscale’s Multi-Billion Dollar Bitcoin Trust Shares

Singapore-based Three Arrows Capital, a digital asset hedge fund, has reportedly become the first qualified investor to hold over 5% of Grayscale’s Bitcoin Trust (OTC:GBTC) shares.

According to Grayscale, its Bitcoin Trust’s shares are the first publicly quoted securities “solely invested in and deriving value from the price of Bitcoin,” the flagship cryptocurrency.

As explained by the company, Grayscale Bitcoin Trust allows investors to gain exposure to the price movement of BTC by using a traditional investment vehicle, without the challenges of actually purchasing and securely storing the pseudonymous cryptocurrency.

The fund has grown to more than 21 million GBTC shares, which are presently valued at around $259 million, or a little more than 20,230 bitcoins (at current rates).

The fund recently filed a Schedule 13G form with the US Securities and Exchange Commission (SEC) for holding 6.26% of all outstanding GBTC shares.

It’s not confirmed whether Three Arrows Capital made “in-kind” contributions, meaning it’s not clear if it actually deposited its own BTC funds in exchange for shares or GBTC shares.

In-kind investments are usually made by institutions so that they can arbitrage premiums over the total value of the asset. Grayscale’s digital asset products, which include Bitcoin Cash (BCH), XRP, Ethereum (ETH), Ethereum Classic (ETC) focused options (among others), reportedly saw almost 80% of inflows in in-kind during Q3 2019.

GBTC invests exclusively in Bitcoin (BTC) and gives exposure to the cryptocurrency via a traditional investment vehicle. Shares are publicly traded via the OTC market.

Launched in 2013, GBTC is presently managing around $3.65 billion in total assets (the value of all the BTC held in the trust), which is a new all-time high. The fund holds approximately 365,190 bitcoins on behalf of clients.

Su Zhu and Kyle Davies from Three Arrows Capital argue that GBTC is one of the most liquid ways for equity investors to take advantage of BTC’s price increase.

GBTC is trading at around $12.30 with 380,090,300 outstanding shares that have a market cap of around $4.68 billion.

The net asset value of GBTC stands at $3.65 billion, meaning it’s trading at around a 28% premium.

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