Grayscale is often viewed as a bellwether for institutional investors’ interest in bitcoin. The fund’s quarterly reports are used to examine whether institutional money is entering the crypto sector or exiting.
Grayscale recently published its first-quarter results for 2020, showing more than $500 million inflows into the fund. Almost 90% of these inflows were institutional money, suggesting that institutional appetite in crypto as an asset class is increasing.
Institutional Money Is Here
Per Grayscale’s report, the firm recorded an inflow of $503.7 million into all its 10 crypto funds in the first quarter of 2020. This marks the fund’s best quarter yet and represents double the inflows in Q3 2019 which stood at $254.8 million.
That quarter-over-quarter doubling of inflows came despite the economic uncertainty amid the coronavirus pandemic. This is because most of Grayscale’s customers view crypto-assets as a “medium to long-term investment opportunity and a core component of their investment portfolios”.
New investors in Q1 2020 accounted for $160.1 million. Grayscale Bitcoin Trust saw quarterly inflows totaling to $388.9 million while the Grayscale Ethereum Trust posted inflows of $110.0 million.
But most importantly is the fact that 88% of all the inflows in the first quarter of 2020 came from institutional investors. A large percentage of these inflows came primarily from hedge funds, the report noted.
Bitcoin Still Rules The Roost
As aforementioned, inflows into the Grayscale Bitcoin Trust totaled to over $388 million. This is the highest level the fund has witnessed in a single quarter, beating the previous high of around $193.8M.
For perspective, Grayscale now controls a whopping 1.7% of bitcoin’s circulating supply. This shows that institutional demand for Grayscale’s Bitcoin Trust has continued to gain momentum since the firm’s inception almost seven years ago. It also marks an increase of approximately 0.1% since late last year. Overall, the fund manages 1.2% of the total crypto market cap.
Most crypto pundits have long asserted that institutional investors will spur mass cryptocurrency adoption. Others maintain that retail demand is just enough to take crypto to the moon. Grayscale’s latest report shows that institutions are buying bitcoin at a fast clip nonetheless. The future looks bright for Bitcoin in 2020 and beyond.