Grayscale Investments’ Litecoin (LTCN) and Bitcoin Cash (BCHG) trust shares are trading at a hefty mark-up, Arcane Research reports.
For LTCN it is 753%, and for BCHG it is 351%. Also, shares of bitcoin trust (GBTC) and ether trust (ETHE) are traded with a margin: 23% and 93.7%, respectively. Arcane Research explained how the markup (or premium) is formed.
Accredited Investors purchase Grayscale Trusts in a private placement. They then hold the shares during the freeze period and then sell them on secondary markets to private investors. It is the accredited investors who form the premium adjusted for demand in the secondary market, Arcane Research emphasized.
The experts write: “Due to the lack of crypto ETFs, such trusts are often the only option for Americans to invest in cryptocurrencies under a 401k retirement plan.” As pointed out in Arcane Research, some retail investors are not aware of the mark-ups when purchasing shares. As a reminder, trading in LTCN and BCHG in the secondary market started earlier this week.