It looks like the institutional presence behind bitcoin just got a whole lot bigger thanks to Grayscale. The institutional investment platform is about to enter its third quarter and has announced that the last three months have attracted nearly $1 billion in overall investments, meaning the company has garnered some of its highest numbers yet.
Grayscale Is Reaching New Heights
One of the big questions that continues to meander throughout the bitcoin and crypto space is, “Are institutional players taking enough action?” It’s been widely stated by industry experts and analysts alike that unless institutional investors get more involved in crypto, it can never reach the mainstream or legitimate status it’s been seeking since its birth in 2008.
However, there have been rumors in the past that institutional investors are reluctant to get involved in the digital asset space given how volatile cryptocurrencies can be. They are widely vulnerable to price swings, with bitcoin, for example, reaching an all-time high of roughly $20,000 per coin in 2017, only to lose approximately 70 percent of its value about 11 months later.
This is a scary thought to institutional investors, and they’d rather not spend their time on something that could potentially lose them all their savings from one night to the next. Thus, it’s been widely believed that institutional players have not bothered to get involved in the crypto space… At least not involved enough.
This new data from Grayscale suggests otherwise. In a quarterly report, the company stated:
With so much inflow to Grayscale Bitcoin Trust relative to newly-mined bitcoin, there is a significant reduction in supply-side pressure, which may be a positive sign for bitcoin price appreciation.
In other words, with so many people getting involved as of late, perhaps the number one cryptocurrency by market cap is in line for another massive price jump similar with what it experienced three years ago when it attained its all-time high. The company’s managing director Michael Sonnenshein explained in an interview:
It’s also worth highlighting that comparing the rate of demand growth for a bitcoin access product like Grayscale Bitcoin Trust to the rate of newly-mined bitcoin is simply to illustrate supply and demand in the market. The comparison does not provide insight into the destination of any mined bitcoin during the measured period.
Could the Data Be Wrong?
However, there are doubters in the space who claim that Grayscale is heavily off in its reporting. One such person is crypto analyst Ryan Watkins, who explained on Twitter:
Grayscale buys way less bitcoin than many would think. Factoring in ‘in-kind’ purchases, Grayscale has only bought 31 percent of all new bitcoins mined since the halving. This is far less than the 150+ percent many have reported. This is just one of many misconceptions about Grayscale’s trusts.