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Olga Kharif

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Traditional hedge funds, pensions and endowments are boosting cryptocurrency holdings, according to the biggest Bitcoin trust provider.

Grayscale Investments, which lets accredited investors own Bitcoin and other coins via its funds, said it took in $608 million last year, surpassing the total amount raised the previous six years. The majority of the inflows — about 71% — came from institutions like hedge funds, up from 66% in 2018, according to Grayscale.

Grayscale’s assets under management have increased to about $2 billion just as a slew of rivals — most notably Mike Novogratz’s Galaxy Digital and Nickel — launched similar investment vehicles. The companies provide exposure to coins like Bitcoin without forcing investors to hold the cryptocurrencies directly. The Grayscale Bitcoin Trust is the largest such Bitcoin fund.

“It’s clear that we’re experiencing institutional adoption,” said Michael Sonnenshein, managing director at Grayscale. “The asset class is experiencing increased validation from legacy companies like Fidelity and CME, signaling to institutions and the investment community as a whole that crypto as an asset class is here to stay.”

Last year, Bitcoin’s price almost doubled, outpacing traditional investments such as U.S. stocks and gold.

Grayscale expanded its investor base by approximately 24% in 2019, the company said.

Author: Olga Kharif

Source: Bloomberg: Biggest Bitcoin Investment Trust Says Hedge-Fund Demand Booming

Bitcoin SV more than doubled in value, continuing its surge as the self-proclaimed inventor of the digital currency told a court that he was able to provide a list of his holdings as ordered by a judge.

Craig Wright said that “a third party has provided the necessary information and key slice to unlock” a roster of his Bitcoin holdings, according to a filing Tuesday with the U.S. District Court of Southern District of Florida. The amount of the holdings hasn’t been specified, but could be in the billions of U.S. dollars.

A judge in West Palm Beach, Florida, had ruled on Jan. 10 that Wright, who claims he created Bitcoin under the pseudonym Satoshi Nakamoto, can postpone a deposition that was scheduled for Tuesday, and receive additional time to produce information about his holdings. The case could shed light on whether Wright actually owns a huge swath of the original coin.

If his identity as Nakamoto is confirmed by the case, that could give a boost to Bitcoin SV, a rival effort that Wright has been supporting for months, after claiming that the original Bitcoin didn’t pan out as he’d hoped.

Judge Beth Bloom also reversed some sanctions imposed on Wright by another judge.

The estate of former business partner Dave Kleiman is suing Wright for Bitcoins worth billions. The outcome of the case could potentially affect markets for Bitcoin and its offshoots, like Bitcoin SV.

In August, a judge ruled that Wright submitted false documents and lied in the legal dispute with the Kleiman estate, ordering him to surrender more than $4 billion of the cryptocurrency.

While many people in the cryptocurrency community doubt Wright’s claims, more than $5 billion in Bitcoin SV, or Satoshi’s Vision, traded over the last 24 hours, according to CoinMarketCap.com. The coin, trading at about $330, is the now the fifth largest by market value, the data tracker said.

Author: Olga Kharif

Source: Bloomberg: Bitcoin Offshoot Doubles After Supposed Creator Finds Bitcoins

Bitcoin enthusiasts are beginning the new year fixated on something that likely won’t happen until May.

Whether a planned reduction in rewards for mining Bitcoin will boost prices or it’s already factored in is dominating discussions across mediums from Twitter to analyst reports.

In a halvening — also referred to as halving — Bitcoin rewards that go to the so-called miners that support the coin’s network drop in half in order to prevent inflation from eroding the purchasing power of the coins. In the previous reductions, the price rose about 8,000% in the year after the 2012 decrease and around 2,000% in the 18 months following the 2016 cut, according to data complied by Bloomberg.

Many observes say it could be different this time around since Bitcoin has become more mainstream and such events are typically priced in as markets mature. The Bitcoin options market, for example, doesn’t show increased price volatility for around the time of the halvening, which could mean that its impact is already factored in, according to crypto data tracker Skew.

Here’s What Being Said:

Nic Carter, co-founder of Boston-based crypto market tracker Coin Metrics:

“Unlike most Bitcoiners, I don’t think the halving is particularly bullish. I am of the view that most people with a Bitcoin position understand that it’s capped in supply, so the issuance change shouldn’t make a difference. Also, the halving is perfectly forecastable, so I have a hard time believing that it constitutes an informational shock. Bitcoin supply has been described and understood from January 2009 and has followed the ordained trajectory ever since.”

Scott Freeman, co-founder of JST Capital, a financial services firm specializing in the digital-asset market:

“If one believes in efficient markets, one could argue that the effect of the halving should already be priced into the market. We continue to believe that the price of BTC will be driven more by an increase in the number of new entrants into the market. We feel that many miners are operating profitably at current prices, but that the less efficient miners will be under pressure once the halving occurs.”

Kyle Samani, co-founder co-founder of Austin, Texas-based hedge fund Multicoin Capital Management LLC:

“The halvening is the largest Schelling point for trading in the history of crypto, and unlike past halvenings, there is a lot of leverage available today that wasn’t available four years ago. A huge Schelling point combined, with lots of leverage — both long and short — means there will be a lot of volatility. However, this doesn’t necessarily mean it’s a good trade to just go long vol because buying vol is expensive.”

Dave Balter, chief executive officer of researcher Flipside Crypto:

“As Bitcoin is often influenced by momentum thinking — and the halving is magnified by a transformation of the economic structure — I’d estimate it will have a positive influence on price.”

Eric Turner, director of research at Messari:

“Based on our research the only halving we saw a discernible impact from was the first. Assuming the potential sell pressure from miners compared to daily volume remains the same heading into the halving, the ratio of sell pressure/volume is the same for this halving as the last in 2016. The halving thesis relies a lot on the idea that miners need to sell their Bitcoin to pay for expenses which is less true now that miners have balance sheets and hedging options that allow them to hold their Bitcoin.”

Travis Kling, founder Los Angeles-based hedge fund Ikigai Asset Management:

“Many market participants have been asking the question — is the Bitcoin halving priced in? That’s the wrong way to frame it. A small single digit percentage of the world currently owns Bitcoin. For those that currently own Bitcoin, a large portion of them understand that Bitcoin’s newly issued supply is cut in half every four years. This is likely a significant reason why they own it — because of Bitcoin’s provable scarcity. For the many billions of people around the world that do not own Bitcoin, few understand this provable scarcity characteristic. So for those billions, it cannot be priced in. To the extent those billions of people discover Bitcoin in the future and decide to buy some, there will be less new available supply to satisfy that increased demand to purchase Bitcoin.”

Author: Olga Kharif

Source: Bloomberg: Bitcoin Traders Feel Fever of ‘Halvening’ Months Ahead of Date

Bitcoin climbed to the highest since November after breaching the $8,000 price level.

Concerns about an escalation in the conflict between the U.S. and Iran are seen as contributing to the rally in Bitcoin, which is not managed by a government.

“Bitcoin and gold are well supported due to rising tensions between the U.S. and Iran,” said Emmanuel Goh, who runs crypto derivatives tracker Skew. “Professional investors are also back from the Christmas break and starting to deploy capital — this is called the January effect in the stock market.”

The world’s largest cryptocurrency rose as much as 7.3% to $8,128 in New York trading, the biggest one-day increase since Dec. 18.

Bloomberg Intelligence strategist Mike McGlone expects Bitcoin to draw support this year because of its fixed supply and greater adoption.

“Volatility should continue to decline, as we expect $6,000 to mark this year’s key support and $10,000 to hold resistance,” McGlone wrote in a note Tuesday.

Author: Olga Kharif

Source: Bloomberg: Bitcoin Climbs Higher After Surging Through $8,000 Level

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