Bitcoin

Latest Grayscale Report Shows Institutional Bitcoin Investment On The Rise

Georgi Georgiev | Jul 17, 2019 | 11:00

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Grayscale recently released its Digital Asset Investment Report for the second quarter of 2019. The company marks a notable increase in the investment into its products, the majority of which are coming from institutional players. 

Institutions Are Here

According to the new Q2 report of Grayscale, the company’s assets under management nearly tripled from $926 million to $2.7 billion. The cause of this is the resurgence of the cryptocurrency market which has had a blast in 2019.

Per the report, the quarterly returns for industry benchmark products, namely the Grayscale Bitcoin Trust and the Grayscale Digital Large Cap Fund were 178.8% and 147.6% respectively.

Perhaps the most interesting bit of the report is the fact that the highest percentage of total demand for Grayscale’s products came from institutional investors. In the second quarter of 2019, they comprised 84% of the total demand, providing a clear sign that big players are already interested in the field.

Grayscale BTC Premium Speaks Of The Same

According to the report, the average weekly investment in all products amounted to $4.9 million. However, $4.1 million of those went into perhaps the most popular product of the company – the Grayscale Bitcoin Trust. Again, 80% of the investments came from institutions.

The Grayscale Bitcoin Trust (GBTC) offers shares which are the first publicly quoted securities solely invested in and deriving their value from the price of bitcoin.

In other words, they allow institutional investors a chance to gain exposure to the movement in Bitcoin’s price without having to worry about storing, owning, or managing private keys. One share of GBTC represents 0.00097834 BTC, which, at the time of this writing, equals $9.24. The public price of one share, however, is currently $12.61 which is around 36 percent more than its actual BTC value.

This means that institutions are happy to pay a 36 percent premium in order to receive exposure to BTC’s price instead of buying Bitcoin directly and having to store and manage it.

Institutional Interest Soars In 2019

Grayscale’s latest report further attests to the fact that institutional interest in Bitcoin is soaring in 2019.

Back in May, Bitcoinist reported on a Fidelity research which also highlighted the rising interest of institutional investors. What is more, the demand for CME Bitcoin Futures on behalf of big players also soared. In June, it was up 80 percent on a year-over-year basis.

What do you think of the rising institutional interest in Bitcoin during 2019? Will it continue or will the sudden pullback diminish it? Don’t hesitate to let us know in the comments below!

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