Institutional investors continued to pile into Grayscale products in the fourth quarter, highlighting the continued urgency for exposure to Bitcoin and Ethereum. Total investments into the firm’s family of products reached $3.3 billion in the final quarter of 2020, translating into average weekly inflows of $250.7 million, the crypto asset manager reported Thursday. That’s a threefold increase from the third quarter when Grayscale products raked in $1.05 billion. Grayscale’s Bitcoin Trust generated $217.1 million in average weekly inflows.
Most of the new investments came from institutional investors.
The Ethereum Trust saw an average of $26.3 million in new capital invested. According to Grayscale, ninety-three percent of new investments came from institutional investors, with asset managers accounting for the largest share. That’s a nine percentage point increase from the third quarter when institutions accounted for 84% of new capital. In all of 2020, investments into Grayscale products totaled around $5.7 billion. That’s more than four times the cumulative inflow between 2013 and 2019. Grayscale’s data reflect a turning point for Bitcoin in 2020, as smart-money investors began to view the digital asset as an inflationary hedge and long-term store of value.
Institutional interest in bitcoin continues to rise.
One of the main reasons for the recent winning rally of bitcoin is the growing institutional interest in the cryptocurrency. Bitcoin’s rally also reflects increasing expectations of it becoming a mainstream payment method, with PayPal opening its network to cryptocurrencies. High profile investors like Paul Tudor Jones, for example, have been buying bitcoin. Many bitcoin bulls say the cryptocurrency is akin to “digital gold,” a potential safe-haven asset and a hedge against inflation. As reported earlier, Dave Chapman, Executive Director at Hong Kong-based digital asset company BC Group, said that institutional investors see the potential for greater risk-adjusted returns compared to traditional investments.