Grayscale, a record number of investments

Grayscale, a record number of investments in a single day

Grayscale on the day of Friday 15 January raised something like $700 million from its investment assets. This is a record. CEO Michael Sonnenshein explained it on Twitter.

Yesterday, @Grayscale raised north of $700 million into its family of products…momentum from Q4 seems to be picking up speed into the new year.

If you haven’t checked out our 4Q20 report yet:

– Michael Sonnenshein (@Sonnenshein) January 16, 2021

This important figure comes shortly after the release of the latest report on the final quarter of 2020, which also contains an annual balance sheet.

Grayscale had announced its intention to end the year with at least $20 billion in its cryptocurrency Bitcoin Era trusts. The goal succeeded, but Grayscale has not stopped and on 5 January already declared total AUM (assets under management) of $22.8 billion.

This figure has now increased by a further $5 billion and as of 15 January stood at $27.1 billion.

It’s an increase that stands out, not least because Grayscale has had to liquidate the XRP trust due to uncertainties surrounding its lawsuit with the SEC.

Grayscale, Bitcoin the market’s most sought-after asset

An analysis of the latest report from Grayscale reveals some interesting facts about 2020 and the last quarter. During 2020, investments were made in Grayscale’s assets for a total of $5.7 billion, for an average of $109 million per week. Obviously the sovereign fund is Bitcoin, which records $90 million of investment per week.

86% of the investment comes from institutional investors. This percentage rises to 93% if only the last quarter of 2020 is considered. The average weekly investment in the Grayscale Bitcoin Trust also grows to $217 million in Q4 2020.

The report reads:

“Grayscale experienced unprecedented investor demand, with approximately $3.3 billion in inflows. Investments in the Grayscale family of products exceeded $5.7 billion in 2020, more than four times the cumulative inflow of $1.2 billion over the 2013-2019 period.”

Prominent is the growth not only in total AUM but also in the Bitcoin trust, which rose from $1.8 billion to $17.5 billion.

“As we have noted in previous reports, inflows into the Grayscale Bitcoin Trust have continued to grow as a percentage of mined Bitcoins. This metric is significant because miners are known to be the natural sellers in the market, often using their freshly mined Bitcoin to pay for operational expenses. In 4Q20, Bitcoin inflows amounted to about 194% of mined Bitcoins.”

Institutions are here to stay, evidenced not only by the numbers marked in 2020, but also by comparisons with previous years. This is Grayscale’s thinking made explicit in the report:

“In fact, the Grayscale Bitcoin Trust accounted for 87% of all inflows into our product family, the highest percentage since 2Q17, further evidence that institutions are looking at Bitcoin as a backup asset. Average institutional commitment is also growing at a significant pace. The average commitment of institutions was $6.8 million, compared to an average of $2.9 million in 3Q20.”

Finally, the report concludes by pointing out that many investors have approached Grayscale to learn more about Bitcoin. The need to meet this demand for knowledge is a priority in order to continue the adoption of cryptocurrencies, the report concludes.