Yesterday’s SEC report revealed that Mike Novogratz’s Galaxy Digital had raised up to $32 million for two Ethereum funds from the investing public. Galaxy Digital is a leading crypto asset management company founded by Mike Novogratz, who is famous for his bullish outlook for Bitcoin. In 2019, the firm launched an earlier Bitcoin fund to enable both individuals and institutional investors to invest in the funds. The Delaware-based crypto firm recorded more than $22 million invested by three institutions, while $10 million came from the other two.As of the time of writing this report, Ethereum was trading at $1542 and has risen by 60% since the beginning of 2021.
What Does the Fund Entail?
Investing in Ethereum funds will allow investors to benefit from the bullish momentum of Ethereum while they don’t need to hold the asset. In this kind of investment, investors are shielded from the risk associated with the fall in Ethereum price. The company, as the custodian, has already assumed the risk of being in the custody of private keys. Note that Galaxy Digital has already secured the authorization from the exchange to be the custodian of the keys. Galaxy Digital is going to charge only 1% of the total client’s equity as the fee.
Meanwhile, Grayscale, the issuer of Grayscale Bitcoin Trust nd Ethereum Trust, has been successful with the same system. Grayscale holds more than 3% of the total Bitcoin in supply and more than 2.7% of the total ethereum in supply. Apart from competing with Grayscale and the other pioneers in crypto funds, Galaxy Digital is embarking on the project to take advantage of the growing popularity of Decentralized Finance (DeFi).
It allows people to benefit from various products and services offered by banks such as lending and borrowing money and swapping of assets without any intermediary. The majority of DeFi platforms are Ethereum-based, and this has contributed largely to strengthening the Ethereum network and Ethere itself that serves as the medium of payment for such transactions.
The Ethereum Network Will be Useful for Programming and Digital Future
Galaxy announced the funds in January but began selling them in February. To invest in the US-based fund, an individual or institution must start with $250,000 while the Cayman Fund goes for $100,00 to start. This fund serves as an alternative investment opportunity for wealthy investors, and they must invest at least $25,000 at start. Right now, the fund has not applied to the SEC but has a grace of 15 days to submit a Form D to the SEC.
A statement shared by Galaxy to its clients in January noted that six applications in the DeFi marketplace were valued at $1billion and were making hundreds of million dollars annually. The firm believes that Ethereum will be very useful for programming and utilizing digital networks that will soon become a universal phenomenon. In January, while Galaxy had $815 million in assets, Grayscale had $22 billion.
The latter has made a considerable amount of money from its Grayscale Bitcoin Fund. In 2018, the wealthy investor Mike Novogratz established Galaxy Digital. The company has commenced Bitcoin funds within and outside the US. It also provides investment and custody of funds via its collaboration with Bakkt.