New York-based cryptocurrency asset managers Grayscale bought over 174,000 Litecoin over the past month. This is the equivalent of 80% of all mined LTC in February.
As of today, the Grayscale Litecoin Trust holds $244.5mn of assets under management (AUM). This makes it the third biggest Grayscale trust after the Bitcoin Trust with $31.2bn AUM and the Ethereum Trust with $4.7bn AUM.
There’s a price to pay for investing in the Grayscale Litecoin Trust
But this comes at a price. First, Grayscale charges an annual fee, varying between 2% to 3%, depending on the trust. The Litecoin Trust charges an annual fee of 2.5%.
There’s also the issue of “premium,” which refers to the difference between the value of the holdings of the trust vs. the market price of the holdings. Grayscale’s current Litecoin per-share value is 0.09276776, and with a current LTC price of $175, this means each Grayscale Litecoin Trust share (LTCN) is equivalent to $15.75 of Litecoin. But the current price of LTCN is $319.
That equates to a premium of over 1,900% – a staggering difference to pay versus direct exposure.
Nonetheless, news of Grayscale buying significant quantities of Litecoin suggests that this does not phase institutional investors.
The response to Grayscale buys and (potential) listings have earned the firm a reputation as a bullish market mover. Rumors of a Chainlink Trust triggered a 20% breakout for LINK at the end of January.
Since Litecoin announced the Grayscale buy, the price of LTC made a $10 swing to close yesterday up 6%. Commenting on the relatively modest increase, Litecoin tweeted that OTC orders do not immediately impact the market.
