Grayscale, record investments in a single day

On Friday, January 15th, Grayscale raised about $700 million from its investment assets. It’s a record. This was explained on Twitter by CEO Michael Sonnenshein.

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

If you haven't checked out our 4Q20 report yet: https://t.co/SwqBKwvO1S

— Sonnenshein (@Sonnenshein) January 16, 2021

This important figure comes shortly after Grayscale released its latest report on the final quarter of 2020, which also contained an annual balance sheet.

Grayscale had announced its intention to end the year with at least $20 billion in its cryptocurrency trusts. The goal succeeded, but Grayscale has not stopped and on January 5th they already declared total Assets Under Management (AUM) of $22.8 billion.

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

This increase is impressive, all the more so considering that Grayscale 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 of inflows. Investment into the Grayscale family of products surpassed $5.7 billion during 2020, more than four times the $1.2 billion cumulative inflow into the products from 2013-2019”.

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 prior reports, the inflows into Grayscale Bitcoin Trust have continued to grow as a percent of mined Bitcoin. This metric is significant because miners are known to be the market’s natural sellers, often using their newly mined Bitcoin to pay for operating expenses. In 4Q20, Bitcoin inflows were approximately 194% of mined Bitcoin”.

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:

“Indeed, Grayscale Bitcoin Trust accounted for 87% of all inflows to our product family, the highest proportion since 2Q17, further evidence of institutions looking to Bitcoin as a reserve asset. The average commitment among institutions is also growing at a significant pace. The average commitment from institutions was $6.8 million, up from 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.