Where are the institutional Bitcoin investors? It has been talked about for years that institutional investors are already in the starting blocks and will soon join BTC. But so far these were just empty promises, or were they? Grayscale, one of the largest asset managers for digital assets, shows in its latest report that interest in Bitcoin has increased massively on the institutional front.
Record of institutional funds at Grayscale
Grayscale has been seen in the past as a possible trigger for an institutional Bitcoin boom. The asset manager focused on large investors early on and uses the fund’s quarterly reports to show whether and how much institutional money is entering or exiting the crypto market. This is a good indicator to measure institutional interest in Bitcoin.
Grayscale recently published its results for the first quarter of 2020, which show more than $500 million in inflows into the fund. Almost 90% of these inflows were institutional. This clearly indicates that the institutional appetite for Bitcoin and cryptocurrencies as an asset class is growing.
Institutional Bitcoin investors on the rise
According to the report, the company records an inflow of exactly $503.7 million into the 10 crypto-funds in the first quarter of 2020. It is the best quarter in the company’s history. Inflows have almost doubled compared to the third quarter of 2019. A total of $254.8 million was invested at that time.
What may come as a surprise to some is that this doubling of inflows occurred in the midst of the corona crisis, despite the economic uncertainties. This is not only because of the revolutionary properties of Bitcoin, but because most Grayscale crypto asset customers consider crypto assets to be „a medium to long-term investment opportunity and a core component of their investment portfolio“.
At Grayscale, however, it is not only long-established investors who invest, but also new ones. New investors accounted for $160.1 million in the first quarter of 2020. Investors are clearly the most interested in Bitcoin right now. The investments in Ethereum are somewhat weaker but still strong. In figures: 388.9 million US dollars went to the Grayscale Bitcoin Trust and 110.0 million US dollars to the Grayscale Ethereum Trust.
Most interestingly, 88% of all inflows in the first quarter of 2020 came from institutional investors. The report states that the majority of this came from various hedge funds.
Grayscale’s data gives us hope that institutional interest in Bitcoin and other crypto currencies will continue to grow. It also currently shows that Bitcoin is seen by many institutional investors as a possible store-of-value in the current crisis, to protect themselves in times of possible hyperinflation. We are curious how the interest from an institutional point of view will develop and will keep you informed as always.