Bitcoin Resurgence Powers Grayscale Investments to a Stellar Year

Digital asset manager Grayscale Investments is on top of the world. While the company had reported impressive numbers per quarter last year, it still not public knowledge of how well it performed in the year. Until now. The company released a comprehensive report which detailed its performances in 2019. 

As the report notes, Grayscale had a record quarter in Q4, raising a staggering $225.5 million from investors. The figure brought its total investment raise for the year to an impressive $607.7 million, capping off a year where a market resurgence benefited the company in several ways. 

While Grayscale’s client base expanded by 24% in 2019, the company also saw deeper engagement with existing clients, which accounted for more than 75% of capital raised this past year. Read more about investor trends in our 2019 report: https://t.co/StTqyXNUsh pic.twitter.com/OEeS8Nu5UL

— Grayscale (@Grayscale) January 16, 2020

Two Consecutive Strong Quarters 

The strong fourth quarter is following a similarly impressive Q3, where the New York-based firm managed to raise $245.9 million in net investments. In its report for that quarter, Grayscale noted that the net investment was about three times the figures it raised in Q2. 

In the yearly report, company Managing Director Michael Sonnenshine explained that 71 percent of the year’s cash flow came from institutional investors. 

“We saw record-breaking investment into Grayscale’s family of products, illustrating continued demand from investors for digital currency access products, and with a majority of investment coming from institutions, it’s clear that we’re experiencing institutional adoption,” he added. 

Existing clients contributed to 75 percent of the company’s inflows, meaning that the company saw a 25 percent increase in its clientele. It also reported that 36 percent of its clients invest in multiple products.

The trend shows a continued interest in cryptocurrencies from institutions, and it is yet another metric that follows performances in Q3- where Grayscale raised about 85 percent of its inflows from institutions. 

Interest in Bitcoin Continues to Trump Others

The report also showed a trend that’s become an all too familiar- the fact that investors are more interested in Bitcoin than any other digital asset. Grayscale’s Bitcoin Investment Trust- which the company promoted aggressively last year through its “Drop Gold” ad campaign, led the company’s investment demand, with a total of $471.7 million in investments, making up for 77 percent of all investments the firm brought in throughout the year. 

Of that figure, $193.8 million was raised in Q4 2019- 85 percent of the total cash flow haul; another metric that was strikingly similar to Q3, when the BIT attracted 84 percent of the company’s total inflows.    

As the company explains, this increased interest in Bitcoin is a larger indication of the total market trend. More people are finding Bitcoin as an attractive investment vehicle, thanks to its stability and higher liquidity over other digital assets. 

Several asset management firms have noticed this, and have positioned themselves to benefit from this increase in the demand for Bitcoin. The Chicago Mercantile Exchange (CME), Bakkt, and Fidelity Asset Management join Grayscale in leading the market for Bitcoin-denominated investment products, and a vast majority of them have recorded significant gains.  

Last week, CME pointed out on twitter that it had seen a 69 percent increase in interest for its Bitcoin investment product this year alone. As the firm explained, the open interest (a metric that denotes market activity levels in a product) recorded last week trailed only June 2019- a period when Bitcoin reached the height of its last bull run.