Grayscale Investments is experiencing increasing interest from hedge funds and other institutional investors in its crypto-currency trusts. The investment firm has bought 390 million in Bitcoin in 2020, representing 0.2 percent of market capitalization.
Sharif-Askary, Managing Director at Grayscale Investments, visited the Podcast Coinscrum markets.. One of the topics discussed was the increasing volumes of Grayscale Trusts. "This was a record year - a record quarter for us. We have never seen such demand for our products before," Sharif-Askary said in the interview.
Reasons for the increasing demand
According to host Nisa Amolis, Grayscale managed $3.8 billion in assets in June. A significant jump from the $2.1 billion in May 2019 and the $2.2 billion in March 2020.
According to Sharif-Askary, 2020 has so far been the year of macroeconomic instability and unprecedented monetary stimulus. She attributed Grayscale's enormous crypto-accumulation to institutions seeking to hedge against inflation in response to US monetary policy in the midst of the COVID 19 crisis.
"From one perspective, COVID-19 and especially its political implications have really created the conditions for Bitcoin to be considered a store of value. […] Institutional investors take active long positions in digital assets through our products. They are looking for an asset that is scarce and can be used as a hedge against inflation in a world of unprecedented monetary stimulus." - Ray Sharif-Askary
Patrick Heusser, who works as a senior trader at Crypto Broker AG and as a guest author regularly writes reports for CVJ.CH, also took part in the podcast. He also sees good conditions for the top five crypto currencies. Due to the close correlation between the coins, the rise in the price of the "King" (Bitcoin) also leads to positive developments for other crypto currencies such as Ethereum, he explains.
Grayscale also relies on Ethereum besides Bitcoin
Grayscale bought Bitcoins (BTC) worth 390 million in 2020, which corresponds to 0.2 percent of the market capitalisation. The company is reportedly acquiring BTC at a rate equal to 1.5 times the amount of new Bitcoins created by mining.
During the remarkable Bitcoin accumulation activities of the Grayscale Bitcoin Investment Trust (BIT), the crypto-fund manager has also aggressively increased its Ethereum stock (ETH).
"It is encouraging for investors to […] diversify within the digital currency asset class, as they would do with any other traditional asset class" - Ray Sharif-Askary
Ray Sharif-Askary revealed in the podcast that the company has acquired ETH to the value of 110 million dollars in 2020. This corresponds to about 22 percent of the total purchases of the crypto-fund manager. Thus, the purchases of Grayscale in the last five months represent 0.4 percent of Ethereum's total market capitalization.
Sharif-Askary noted that more than 38 percent of current clients own more than one crypto asset, a significant increase of 9 percent over the previous year.