Rothschild Investment Corp., an asset management firm, has announced that it has increased its exposure to Bitcoin by at least 269% since April 2021, according to recent data it filed in a Form 13F report to the Securities and Exchange Commission (SEC).
The increased positions on crypto from the billion-dollar investment firm now totals 141,405 shares of Grayscale’s Bitcoin Trust (GBTC). According to the recent filing, the firm’s shares jumped to nearly 150,000 from 38,346 back in April this year. This brings the firm’s holdings to an equivalent Bitcoin exposure of 132.8 BTC, or roughly $3.8 million in U.S. dollars according to current market price.
“These are really investors looking at their allocations in the medium to long term, and so any volatility or dampening of volatility is not something anyone is fazed by.” said Grayscale CEO Michael Sonnenshein in an interview with CNBC.
Rothschild has also invested an additional 5% or 13,817 shares on Grayscale’s Ethereum Trust, bringing the firm’s ETHE holdings to some $6.3 million at 279,119 shares for the secondary crypto exposure.
Due to the generally bearish downturn of the crypto market, GBTC and ETHE have both faced losses in value, from $59 per share for GBTC in mid-April this year to its current valuation at roughly $28 (-52%). ETHE on the other hand is down by 56% with a 41.56 per share value posted on May 10th this year, to its current share price of $17.93.
Despite this, institutional investors such as Rothschild remain unfazed and have placed more attention to their crypto holdings, given that these are mostly short-term price movements.
“Institutional investors seeking exposure to Bitcoin and other digital assets was the main narrative during the boom on the crypto markets early in the year. Before the markets began retreating, giants such as Microstrategy, Square, and Tesla dominated headlines with their bold bets on bitcoin. Since then, there have been fewer publicly disclosed investments of comparable size. That’s why the narrative about institutional money coming in has become much less alive in public perception.” says Ulrik Lykke, Executive Director at ARK36, a crypto and digital assets hedge fund.
Concerns that institutional demand for crypto has weakened because of the price downturn have circulated in the past week as Grayscale recently unlocked 16,000 BTC worth of GBTC shares, highlighting price pressures in the market by implication.
“I started working in bitcoin in late 2010 because I saw this as a technology to help the unbanked, low and middle class to save and spend outside the banking system. For this reason, I get more excited about millions of smaller fish taking a stake in this ecosystem than a single large player. Saying that, having large family offices take a stake in these protocols does bring confidence and signals to the market that this really could be the future of finance.” share Joshua Scigala, a co-founder at The Standard, a DeFi infrastructure project.
Some 40,000 BTC is still slated to be unlocked by Grayscale in the coming weeks over a six-month lock-in period, and projections of its impact on the general crypto market have pointed to increased selling pressure as it happens. Spot markets, on the other hand, are projected to likely remain unaffected by these pressures.
“We have to take such headlines with a grain of salt. Rothschild are not believers in crypto. First, their $1.6B vehicle got an exposure to bitcoin in the amount of only $3.4M. Second, GBTC holding doesn’t even make [the] top 50 in their portfolio asset allocation. And finally following a Markowitz portfolio allocation theory they have to invest in any asset that presents diversification benefits to the entire portfolio, and thus crypto to them will stop being interesting once it stops being uncorrelated to the broader market.” says Kirill Suslov, CEO of trading app TabTrader.
To date, Rothschild’s holdings for both GBTC and ETHE amount to less than 1% of its $1.7 billion in assets under management (AUM). According to current data from CoinMarketCap, Bitcoin ($BTC) is now trading at $32,259, while Ethereum (ETH) is trading at $2,001 per unit.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
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