Institutional investors have continued to invest heavily in Grayscale, the New York-based top crypto and Bitcoin asset management founded by Barry Silbert. In the 4th quarter of 2020, the company recorded a stunning $3.3 billion inflow. Meanwhile, its weekly inflows averaged $250 million in the last quarter, making the year an extremely profitable one for the leading crypto asset manager.
Financial institutions added increasingly to their holdings in Grayscale in the last part of 2020, reflecting the need for wide adoption of Bitcoin and Ethereum. Grayscale recorded total investments of $3.3 billion in the last quarter of the year, an equivalent of approximately $250 million weekly as stated in its Thursday report.
Institutions account for the largest percentage of Grayscale new investments
Every week, Bitcoin Trust garnered $217 million while Ethereum Trust had weekly inflows of 26 million from investors on the average, both managed by Grayscale. The crypto asset manager revealed that institutional investors–mostly asset managers constitute 93% of new investors. This shows a 9% rise in the number of institutional investors that had invested in the digital asset manager in just a quarter.
As of the 3rd quarter, only 84% of new investments came from institutions. In 2020, Grayscale recorded $5.7 billion in investments, more than 400% of the accumulated investments from 2013 to 2019. Some investors have been citing Grayscale performance as proof that the public request for Bitcoin exposure has increased, which is the best time for a crypto ETF.
In August last year, Grayscale announced two crypto funds: a bitcoin cash trust and a Litecoin cash trust. The price of one of the funds rose by 1,000% due to the huge demand, causing investors to pay a premium– price above the market rate.
Grayscale performance is a reflection of a positive outlook for Bitcoin
The Grayscale’s stellar performance was a vivid reflection of a watershed in Bitcoin’s value in 2020. Both individual and large smart investors started to see Bitcoin, and of course, cryptocurrencies as a reliable store of value and a new hedge against inflation. The digital asset’s changed perception contributed to the surge in price to an all-time high of $41,000 after rising by 200% in three weeks. Bitcoin is now on its path to universal acceptance, courtesy of its wide adoption by institutional investors. Jeff Curie made this assertion of Goldman Sachs.
However, he added that there is still room for improvement before the digital asset can be universally accepted as an institution-grade asset. Meanwhile, there are indications that the asset may gather more momentum in weeks ahead, given the incoming Biden presidency’s tendency to inject trillions of dollars into the economy as a stimulus package. Hence, the significant drop in the U.S. dollar is an impetus for Bitcoin to soar.
Investors have kept mounting pressure on the U.S Securities and Exchange Commission (SEC) to accept a crypto exchange-traded fund (ETF) to allow investors to trade in indexes of bitcoin and cryptocurrencies. But the SEC has maintained its stance that the digital assets cannot be added as they are susceptible to manipulation.
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