Grayscale could trigger next phase of bitcoin run

The end of the asset lock-up period has historically triggered price gains, data shows.

Bitcoin (BTC) has been mostly stagnant for the past month thanks to Grayscale, but that is about to change.

According to data from on-chain analytics website CryptoQuant, the Grayscale Bitcoin Trust (GBTC) premium just hit its lowest level since April 2019.

Grayscale lock-up period ends Wednesday

Grayscale has made frequent headlines this year thanks to record-breaking BTC purchases and demand. But despite the inflows, the BTC/USD pair has been unable to rise further.

At the beginning of February, the trust’s buying premium is around US$6.50. Before that, however, it could go as high as 40 US dollars. In the past, this has coincided with a strong fluctuation. Big premiums, on the other hand, mean big upside for Bitcoin.

At the end of December, an article in the technology magazine Hackernoon explained the phenomenon as being related to the release of GBTC shares, which have a usual lock-up period.

Once they are released, Bitcoin tends to shoot upwards as customers reinvest their profits in BTC. The period before that is characterised by a lack of price movement.

“Importantly, once these higher rates and premiums are realised after a release, the price consolidates again. That allows the premium to shrink again before the next release,” Hackernoon summarises.

With the next release set for 3 February, anticipation is building for a continuation of bitcoin’s bull run.

“This gap is causing the premiums to shrink again, just like the nine times before,” the article continued. Thus, the article correctly predicted the price action for the second half of January.

“And it will continue to shrink until the next release. So I expect the price to either consolidate or fall.”

No decline in Grayscale’s investment

Grayscale, meanwhile, continues to expand its offering as institutional interest in bitcoin and altcoins in general remains high.

This week saw the reopening of the Ethereum Trust after being closed since December. Grayscale will also sponsor the Bloomberg Crypto Summit crypto event on 25 February.

GBTC had $21.8 billion in assets under management as of 1 February. Ether (ETH) purchases had been suspended since 10 December.