One of the biggest complaints about the cryptocurrency space is that it isn’t doing enough to attract institutional investors. Well, this may be changing thanks to newfound attention for the Grayscale Bitcoin Trust in New York.
Grayscale Is Boosting the Institutional Presence
Despite attempts to integrate institutional crypto trading platforms such as Bakkt – owned and governed by the Intercontinental Exchange (ICE) – the presence of professional investors in the crypto world appears to be rather lackluster.
Thanks to Grayscale, however, many institutional players appear to be stepping deeper and deeper into digital territory. The firm recently reported more than $1 billion in investments from said traders over the past 12 months, and this number is expected to grow even further.
The news comes at a rather strange time, as Black Rock – one of the world’s biggest asset fund managers – says it’s lost many customers over the past few weeks, likely thanks to the numerous price drops incurred by cryptocurrencies due to the growing coronavirus pandemic.
Since mid-March, currencies such as bitcoin, Ethereum and many others have experienced heavy falls given the frailty of both the digital and mainstream economies, and while some are beginning to show signs of recovery (i.e. bitcoin has surged from $3,800 to about $7,000 at the time of writing), there is still plenty of room for improvement.
It’s been nearly five years since Black Rock experienced such dismal trading levels. Grayscale, by contrast, is rising from the ashes and spreading its wings like a digital phoenix. In a statement regarding its Q1 2020 results, the firm explains:
For the first time, inflows into Grayscale products over a 12-month period crossed the $1 billion threshold, showing strong and sustained evidence that investors are increasing their digital asset exposure at current levels. Many of our investors view digital assets as a medium to long-term investment opportunity and a core component of their investment portfolios. They are tactically using drawdowns to increase their exposure to the asset class, which they are now doing at the fastest pace in Grayscale history. Quarter-over-quarter inflows more than doubled to $503.7 million, demonstrating demand is reaching new peak levels, even in a ‘risk-off’ environment.
Maybe the Crazy Circumstances Have Helped Out…
The sentiment thus far has been that the growing coronavirus pandemic somehow led to massive selloffs of bitcoin and other digital currencies, thereby constituting their recent price drops. However, Grayscale says the unstable environment has worked in crypto and other risky assets’ favor, explaining:
It’s been a rough start to the new decade for nearly all risk assets and currencies as a result of the coronavirus pandemic, but as the virus gained momentum in March, disrupting markets and economies across the globe, the clear winning trade has been ‘long volatility.’
Following this news, bitcoin added roughly $300 to its price.