Grayscale Reports Massive Increase in Institutional Interest in Bitcoin

Grayscale Reports Massive Increase in Institutional Interest in Bitcoin
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On May 13, digital asset management firm Grayscale Investments published its Digital Asset Investment Report for the first quarter of 2019, revealing that it had been able to trump its performances over the past quarter thanks in large part to an influx of institutional investors. The report, which was published on the company’s blog, revealed that there had been a 42 percent increase in product investment over the previous quarter. Total investments stood at $42.7 million, as opposed to the $30.1 million reported in Q4 2018.

According to the report, a staggering 73 percent of investors in Grayscale products were institutional investors and hedge funds. This compared even more favorably to the already impressive 56 percent that was reported back in the first half of 2018.

The upsurge follows the firm’s introduction of its pro-bitcoin (BTC) advertising initiative “Drop Gold” on May 1. The Drop Gold campaign is built on bitcoin as an alternative to gold investments. The campaign promoted bitcoin investment within Grayscale’s publicly traded Bitcoin Investment Trust (BIT).

In Q4 2018, Grayscale’s products, including the company’s Bitcoin Investment Trust (GBIT), saw investments totaling less than $1 million from hedge funds. However, things seemed to have taken a dramatic turn in the first quarter of this year, as inflows from hedge funds increased by more than 2400 percent, surging to $24 million.

The Bitcoin Investment Trust was the primary recipient of total inflows, seeing an average of $2.3 million in inflows per week. For better comparison, the company reported having seen average weekly inflows of $3.2 million in total. Essentially, this means that the company’s other investment products, such as its Funds based on Ethereum, XRP, Bitcoin Cash, and others,  raked in less than $1 million per week on average. This is a mixed sweet result for Grayscale who released altcoin specific index funds in 2018.

In part, the report read, “Nearly all inflows in Q1 were into Grayscale Bitcoin Trust (99%). One possible explanation for this is that Bitcoin found a ‘sweet spot’ with respect to relative risk and return expectations versus other digital assets.”

The report paints a similar picture to that of the global cryptocurrency market. While digital assets aren’t quite close to the dominant numbers that they recorded back at the height of the crypto boom, it’s worth noting that they’ve been on quite a rebound over the past few weeks.

Bitcoin (BTC) itself has been on quite an impressive run, breaking past the $8,000 mark for the first time since July 2018. At press time, the world’s most popular digital asset is trading at a value of $8,153 per token, holding a total market capitalization of $144.3 billion (per data from CoinMarketCap).

About Jimmy Aki

Jimmy has been following the development of blockchain for several years, and he is optimistic about its potential to democratize the financial system.