The purchase may result in a tightening of the bitcoin supply and increasing demand may trigger prices.
U.S. financial services giant Guggenheim Partners has filed a request with the U.S. Securities and Exchange Commission (SEC) to invest up to $500 million ($2.6 billion) in Crypto Bull through the Greyscale crypto investment fund.
According to the request to the SEC, Guggenheim intends to allocate 10% of its net assets in bitcoin. The company has about $5 billion in assets under management, if it gets approval to allocate the 10%, that would mean a purchase worth at least $500 million.
„Guggenheim can seek investment exposure in bitcoin by investing indirectly up to 10% of its net asset value through the Grayscale Bitcoin Trust (“ GBTC „)“.
Guggenheim Partners is a consulting and investment firm. It offers investment banking, capital markets, insurance, trade, finance and retail real estate services. The company serves clients around the world.
If the SEC approves the order, bitcoin will likely exceed its historical record of $20,000 and enter price discovery mode.
After the news began to circulate, the options market recorded an increase in digital currency purchases.
The institutional cash flow at the bitcoin was massive this year, as opposed to 2017. Companies investing in digital currency can feed the market in two ways. First, when a name known as the Guggenheim shows interest in investing in bitcoin, it animates the general feeling of the market.
And second, when institutions buy bitcoin, they create significant demand because they usually invest hundreds of millions of dollars at once.
With the price of bitcoin hovering around $18,000, this purchase would amount to about 27,650 bitcoins.
The purchase may result in a tightening of the bitcoin supply and increasing demand may trigger prices. Many analysts have started to give six-digit targets for bitcoin by the end of 2021, forecasting bitcoin at $100,000.
Guggenheim Partners should now join a list of institutions that have taken public positions in bitcoin, institutions such as MicroStrategy, Square and PayPal have come out ahead.
Guggenheim intends to make the investment through a subsidiary due to tax reasons:
„As the fund invests in GBTC, it will do so through a wholly-owned subsidiary, which is incorporated as a limited liability company under the laws of the Cayman Islands. The fund will not invest, directly or indirectly, in cryptomoedas,“ the document says.