I read this nice article that was around lately:
Grayscale Trust and ‘The Effect’ on Crypto PricesIt's a nice read, I do recommend it.
The author focus on the way the accredited investors can leverage their access to the primary market to cash in the premium embedded in the secondary market, using the proceeds of this to "rinse and repeat", each time increasing the buying pressure on the fund.
This is the crucial passage:
Grayscale experiences inflows into its Trust. The investors providing the inflow receive GBTC shares in return. These shares are locked for six months.
When the shares are unlocked, the investors participating in the arbitrage process buy BTC on the spot market for the next six month cycle.
and
The next major unlocking is set to happen around February 3, 2021. Meaning the time period beforehand will be void of unlockings.
This void enables the market to cool down. That’s what we’re currently witnessing the week of January 11th.
The hypothesis, ad the article also provide some loose proofs about that, is that an investors looks to reinvest the proceeds of the premium cash in again in GBTC shares, so there is a forced buying around expiry of locks in as they are either harvesting BTC for an In-kind subscription, or they give the dollars to GBTC that buys BTC in his sown to hedge their exposure.
Just notable to remember here, and I think that I wasn't mentioned in the article, that every GBTC interaction do not constiture a taxable event if the proceeds are kept inside GBTC and not cashed out. This of course is an heavy incentive for the investors to repeat this little trick.
The article inform us that the next big lock.-in expiry is February 2.
SourceCan you see how February compares to June? or July?
February end of lock period is related to buys in July 2020. This is NOTHING compared to the buys in 20Q4 year, as you can see, that will result in end of 21Q2 end of lock-ins.