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November 25, 2020

Governance & Guardrails

Grayscale’s Record Inflows & Their Impact on the Market

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Crypto investment fund manager Grayscale Investments recently saw the value of its AUM reach $3.8 billion, up from $2.1 billion in May 2019. The average weekly investment into the trust has increased by over 800% vs. Q1 2019’s $3.2 million. Ray Sharif-Askary, director of investor relations and business development at Grayscale, explained how it’s been a record year and record quarter for the firm, noting that they’ve never seen demand like this before for their products. She explained the impact from the pandemic broadly speaking, saying:

(11:11) “From a broader perspective, COVID-19 and the policy implications especially have really set the stage for bitcoin to be seen as a store of value asset that we had hoped that it eventually would be. You have, institutional investors are taking active long positions in digital assets through our products and it’s because they’re looking for an asset that is scarce and that can be used as an inflation hedge in a world where we’re faced with unprecedented monetary stimulus.”

Grayscale manages the Grayscale Bitcoin Trust and other funds tied to altcoins.

(12:01:) “In Q1 we raised over half a billion dollars across all our products. About $390 million of that was into our bitcoin trust. We also saw about $110 million in the Ethereum product. And I think we’d be remiss not to look at the broader narrative there, which is that we continue to see diversification. Right now about 38% of our investors are allocated to multiple Grayscale products. About a year ago that number was a little under 30%. So it’s certainly encouraging to see investors allocate and diversify within the digital currency asset class just like they would any other traditional asset class.”

Grayscale has $3.8 billion in AUM and the largest gold ETF has approximately $10 billion. Nisa asked when Grayscale will overtake its rival store-of-value asset.

(14:46) “Over the last 12 months, we actually raised over $1 billion into our 10 products. It would be great to see that demand remain constant and to even increase. I think it’s impossible to say when we’ll overtake the world’s largest gold ETF. But i do know that the idea of bitcoin as digital gold and as a store of value is only becoming more and more prevalent. And so as investors think about finding uncorrelated sources of alpha your guess is as good as mine.”

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Gerelyn Terzo
Gerelyn caught wind of bitcoin in mid-2017 and after learning about the peer-to-peer nature of Satoshi's creation has never looked back. Previously she covered institutional investing and fintech for several major trade publications. Gerelyn resides in Verona, N.J.

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