Grayscale reports another record year
The world's largest crypto management firm, Grayscale, took in a record $607 million of investment in 2019—a sum that surpasses the cumulative investment from the last six years.
This was revealed in the firm’s end of year investment report, which shows several other records were also set, including the best month ever in October 2019 when inflows to Grayscale’s Bitcoin Trust hit $194 million.
Almost a quarter of the capital raised by Grayscale in 2019 came from new clients, which are primarily institutional investors and hedge funds. These newcomers contributed $147 million, or 24 percent of the total capital raised. Most of this was poured into Grayscale’s enduringly popular flagship product; the Bitcoin Trust (GBTC).
Existing investors have shown a "deeper engagement" with Grayscale in 2019, moving beyond Bitcoin to place bets on altcoin products like the Ethereum Trust, and diversified funds like the Digital Large Cap Fund. Around 36 percent of Grayscale investors have allocations to several different products.
Investment rises as prices stagnate
Grayscale’s growth is most clearly shown when compared to 2017, which saw investors commit one hundred million ($100,000,000) to Grayscale as the Bitcoin price soared 1300 percent. By contrast, institutional investors pledged over six hundred million ($600,000,000) to Grayscale in 2019 as bitcoin pushed up only 95 percent.
This suggests institutional investors aren’t chasing short-term bull market wins, but thinking long-term and buying bitcoin as an investment—perhaps in line with the digital gold thesis that Grayscale pitched with its recent #DropGold marketing campaign.
Grayscale is also likely to be benefitting from a uniquely privileged position in the bitcoin investment world. The firm enjoys a monopoly over bitcoin products aimed at institutions, which is unlikely to be toppled soon as regulators have made it clear that a Bitcoin ETF is not on the short-term horizon.
Looking ahead, Grayscale could be set to become even more dominant. The firm’s Bitcoin Trust has recently attained the status of Securities and Exchange Commission (SEC) reporting company, which could help to win confidence from even more institutions.
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