Grayscale Ethereum Trust Just Bought Over 50,000 ETH in One Day
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Grayscale Ethereum Trust Just Bought Over 50,000 ETH in One Day

Bitcoin may take the spotlight, but Ethereum’s programmability keeps excitement high for the entire token ecosystem.
Neither the author, Tim Fries, nor this website, The Tokenist, provide financial advice. Please consult our website policy prior to making financial decisions.

In the coming years, much of social and financial activity will be conducted on blockchains. Boosting each other, Ethereum and Bitcoin blockchains are forming the foundation for the tokenist economy of the internet. Grayscale Ethereum Trust responds accordingly.

Biggest Crypto Asset Manager Dives into ETH

There’s no underscoring the massive role that Grayscale plays: BlackRock is to traditional finance, what the Grayscale Ethereum Trust is to the crypto world. Both asset managers hold the top positions for each space. However, while BlackRock holds $8.7 trillion in AUM (assets under management), Grayscale reported managing over $4 billion at the beginning of February.

Last Thursday, Grayscale’s crypto holdings increased significantly. The world’s largest crypto asset manager bought 52,730 ETH, worth over $93 million at the time of the purchase. Overall, Grayscale now holds 3.13 million ETH in total, representing a value of over $5.5 billion.

As the price of ETH keeps skyrocketing on a weekly basis, expect this value to increase. As you can see from the overlaid graph of Bitcoin (BTC), Ethereum (ETH) and Grayscale Ethereum Trust, their futures are intertwined.

Image credit: TradingView

Grayscale’s Role in the Crypto Ecosystem

Founded in 2013 by Digital Currency Group, Barry Silbert, the New York-based Grayscale helps investors enter the expanding digital asset arena with familiar financial products. As a result, they are mainstreaming the internet of money in parallel to traditional finance. At the end of last year, the trust stopped accepting new investors, reopening its doors again at the beginning of February.

Grayscale’s two-month suspension included its six investment funds: Digital Large Cap Fund, Bitcoin, Bitcoin Cash, Ethereum Classic, Ethereum and Litecoin. Such closures for private placement rounds are a standard fair for the trust, the previous one occurring in Q4 2019.

After reopening, in addition to the latest purchase of ETH, Grayscale also acquired 36,987 Litecoin (LTC), putting its total LTC AUM over $250 million mark. As a cryptocurrency that offers a transaction speed that’s four times faster than BTC, alongside being more environmentally friendly, Litecoin, with its finite pool of 81 million coins, is now the 8th most valued crypto asset.

Image credit: The Tokenist

The Evolution of the Token Economy

Of its five investment funds, Grayscale trust placed heavy emphasis on ETH. Since February’s reopening, it added 195,000 ETH, with 52,730 ETH amassed in a single day last Thursday. This means that Grayscale saw it fit to more than double its Ethereum pool since the beginning of the year. If you have been following the critical role of Ethereum’s blockchain, this is not surprising.

Image credit: Glassnode

As Ethereum upgrades to 2.0, leaving behind stifling congestion and drastically increases its transaction speed, it forms the foundation for cryptocurrency’s day-to-day use case. While Bitcoin represents digital gold, bulwarking against the foibles of the Federal Reserve, Ethereum represents a lucrative launch pad for the entire ecosystem of fungible tokens.

Following the massive Bitcoin bullrun, all those newcomers gain exposure to other aspects of the blockchain space. Although Bitcoin’s blockchain is not directly pluggable into Ethereum’s blockchain, there are many ways around this issue. This can be circumvented through bridge currencies like USDT or WBTC, or through cross-chain interoperability projects such as Cosmos, Kylin Network, or the ambitious Wanchain.

Ethereum Digital Collectibles

As Bitcoin holders increase by millions, a portion of that pool will inevitably leak into Decentralized Finance (DeFi). After initial birthing pains, we are seeing its steady consolidation. Almost all DeFi projects – dApps – run on the Ethereum blockchain, currently oscillating between $39 and $40 billion in total locked value.

Image credit: DeFiPulse.com

Not only do more people engage in DeFi’s yield farming, but this intertwines with other aspects of the burgeoning token economy – gaming and digital collectibles. This is best exemplified by the newly released blockchain-powered game Cometh. Representing a gamified DeFi yield farming, the game puts you in the role of a galactic explorer. As it goes in such games, you have to accrue money to buy better spaceships.

Image credit: Cometh

Of course, in this case, better spaceships represent better yield farming, once you position them to nearby asteroids for mining. Moreover, these spaceships are non-fungible tokens – NFTs. Thanks to Ethereum’s smart contracts, they are indivisible, indestructible, unique, and rare. This makes them ideal to supplant traditional artwork economy.

For the last four months, we have seen many examples of the NFT economy. Traded on Rarible, OpenSea, or MakersPlace – all Ethereum’s dApp marketplaces – an entire bursting ecosystem of digital collectibles is forming. The trades keep increasing astronomically in value:

  • The first record-breaker was Batman NFT, selling for 302.5 ETH, worth $200,000 at the time.
  • Current record-holder is Alien NFT from Cryptopunks, achieving double the previous record price at 605 ETH, representing $761,889 at the time of purchase.

With so many Ethereum applications emerging, it is easy to see why Grayscale would commit to ETH so heavily in such a short time span. Those who are paying close attention understand that the future is decentralized. After all, the establishment is doing everything in its power to push people away from rigged financial systems.

Do you know of any artists who take advantage of the NFT economy? Let us know in the comments below.

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