With over $1 billion in new investments, the world's largest digital asset manager, Grayscale Investments, has seen the largest quarterly inflow of new investments ever. This is the third record quarter in a row.
According to its recently released quarterly report, the New York-based investment firm now manages nearly $6 billion in digital assets. These assets are spread across its ten investment products, designed to provide institutional investors with access to the crypto-market.
Bitcoin remains the most popular currency
The Grayscale Bitcoin Trust still accounts for approximately 70% of all investments, which is approximately $720 million this quarter. Inflows into the Grayscale Bitcoin Trust have been proportional to approximately 77% of total Bitcoin mining in 3Q20. While the mining is continuously bringing supply to the market, a similar proportion of the supply is being taken off the market through investments in the Grayscale Bitcoin Trust.
Grayscale Bitcoin Trust inflows as share of Bitcoin mining
With this being said, the demand for altcoins such as Ether (ETH), Bitcoin Cash (BCH), Litecoin (LTC) and XRP have also increased particularly strongly. For the first time, over half of all investors (57%) invested in two or more crypto investment products.
Cumulative inflows by Grayscale product
Managing Director Michael Sonnenshein told Business Insider that he hopes for a future in which many different digital assets coexist. Different crypto currencies could be compared with the "precious metal family”. Just like gold, silver and platinum, they all have different use cases, applications and prices.
Demand could be related to stimulus packages
Quantitative Easing (QE) has increased the Federal Reserve's balance sheet to over $7 trillion. According to Sonnenshein, it is possible that many investors see crypto currencies like Bitcoin as a hedge against currency devaluation.
«I think from our investor conversations, a lot of that is drawn from bitcoin being an asset that has verifiable scarcity, which is an attribute that is really resonating with the investment community, especially against the backdrop of unlimited financial economic stimulus.» – Michael Sonnenshein, Managing Director Grayscale
Recently, there are more and more companies that take this view. MicroStrategy allocated a total of $425 million of its reserves to Bitcoin, and yesterday, asset manager Stone Ridge revealed a $115 million investment. However, Grayscale is well ahead with almost 450,000 BTC (just under 2.5% of the total Bitcoin amount).
Bitcoin holdings in public companies
