| Peter Wind

Key highlights:

  • Grayscale continued to break its own records in Q4 2020
  • Investors poured $3.3 billion into the company’s crypto investment products in the quarter
  • 93% of the inflows in the quarter came from institutional investors

Grayscale posts another record breaking quarter with $3.3 billion invested into its products in Q4 2020

Crypto asset manager recorded another record-breaking quarter – in the fourth quarter of 2020, the company saw $3.3 billion in inflows to its cryptocurrency investment products, smashing the previous quarterly record of $1.05 billion which was set in Q3 2020. 

As per Grayscale’s latest quarterly report, 93% of the investment into its products in Q4 2020 came from institutional investors, primarily asset managers.

Investments in Grayscale’s products eclipsed inflows in all the other years Grayscale has been operating combined. The company stated:

»Investment into the Grayscale family of products surpassed $5.7 billion during 2020, more than four times the $1.2 billion cumulative inflow into the products from 2013-2019.«

Grayscale’s growth is one of the clearest indicators that institutional investors now have a significant presence in the Bitcoin market. At this point in time, institutional investors overwhelmingly favor Bitcoin compared to other crypto assets. In line with this, inflows into Grayscale’s flagship Bitcoin Trust represented 87% of all the inflows into Grayscale’s products in Q4 2020. The proportion of inflows that went to the Bitcoin Trust was the highest since Q2 2017, Grayscale noted.

To illustrate the magnitude of the demand, Grayscale pointed out that in Q4 2020, inflows into the Bitcoin Trust represented 194% of the BTC that was mined in that period (this is not to imply that miners are directly selling newly-mined coins to Grayscale):

»As we have noted in prior reports, the inflows into Grayscale Bitcoin Trust have continued to grow as a percent of mined Bitcoin. This metric is significant because miners are known to be the market’s natural sellers, often using their newly mined Bitcoin to pay for operating expenses. In 4Q20, Bitcoin inflows were approximately 194% of mined Bitcoin.«

As of December 31 2020, Grayscale managed more than $20 billion worth of assets. Its growth has continued in the earliest parts of 2021, as the company managed $24.7 billion worth of assets as of January 13, 2021. The total cryptocurrency market cap at the time of writing is $1.07 trillion.

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