Grayscale surpasses $30 billion in funds under management

Grayscale has announced that it has surpassed $30 billion in funds under management.

02/04/21 UPDATE: Net Assets Under Management, Holdings per Share, and Market Price per Share for our Investment Products.

Total AUM: $30.1 billion$BTC $BCH $ETH $ETC $ZEN $LTC $XLM $ZEC pic.twitter.com/EJusspgOnK

— Grayscale (@Grayscale) February 4, 2021

This is the first time this has happened for the fund that was created a few years ago. 

Of that, 80% is in its Bitcoin Trust (over $24.3 billion), while 16% is in the Ethereum Trust ($4.9 billion). None of the other products individually exceeds $1 billion under management. 

What’s really surprising is that in the Q4 2020 report, in December, they announced that they had ended the year with $20.2 billion in funds under management, so in just over a month these have grown by almost 50%. 

While it is true that at the end of 2020 a BTC was worth less than $29,000 and an ETH less than $750, the price increases of BTC and ETH do not seem to justify such an increase on their own. In fact, Bitcoin has risen by 29% since then, and although Ethereum has risen by 123% it only accounts for about 16% of the capital under management.

In other words, the growth is also due to the additional purchases of BTC and ETH made on the market to meet the growing demand of its customers.

How do the Grayscale funds work 

Grayscale is not a direct investor, but a passive fund that allows its clients to be exposed to crypto assets without having to buy or hold them directly. 

This means that even those investors who do not want to, or cannot, buy and hold unregulated financial products can take a position on them by having Grayscale buy and hold them. 

Accordingly, Grayscale’s purchases do not reflect the company’s financial strategy at all, but that of its clients, which are usually large funds or institutional investors. 

It should be noted that that $30 billion in total managed capital corresponds to 2.6% of the total capitalization of all cryptocurrencies listed on CoinMarketCap, and the $24.3 billion in BTC alone corresponds to 3.4% of Bitcoin’s entire market capitalization.

Grayscale is therefore now one of the main market movers in this sector, although its buying strategies are really just a consequence of its clients’ overall investment strategies.