Grayscale, which owns the largest cryptocurrency investment funds in the world, has been buying large amounts of Litecoin to meet institutional demand. In total, 237,417 were purchased in the last 30 days. But one thing draws a lot of attention, the premium for the purchase of the asset is almost 22x or 2230.94%.
Grayscale Investments – Source: Bybt.The premium is the difference between the market value of a given asset and the amount paid by a given investor who is willing to pay more for it. For example, a bitcoin share in the Grayscale fund has a premium of around 25%. This means that you will pay 25% more on the BTC quote to own it.
The costs that price the premium are innumerable, ranging from custody, administrative, regulatory requirements, guarantee that it is not an illegal product, good or service. In particular, investors may want to pay more for cryptocurrencies so that they have a guarantee that it is not a currency that has gone through illegal darknet markets, which could bring legal complications to those involved in the operation.
This excessively high premium drew attention in a post on reddit, with users proposing hypotheses for this absurd difference. Many pointed out the high demand caused due to the recent opening of the LTC purchase from fund investors. However, it is very difficult to know exactly the reason (or reasons) for this price detachment.
Are investors buying LTC in anticipation of the long-awaited mimblewimble privacy update? The update will bring greater privacy and allow to overshadow litecoin transactions. But as Grayscale investors cannot withdraw in cryptocurrency, it is possible that they are only speculating the asset's price for after this update.
Read more: Grayscale is buying 3 times more bitcoins than they are mined
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