There has been news that the largest and most prominent cryptocurrency fund, the Grayscale Bitcoin Trust, has been aggressively buying up Bitcoin after the halving event, but this trust is not only for Bitcoin. The trust represents true institutional interest in the asset class that Bitocin is, and can be.
That being said, the jury in the institutional space is still out on Bitcoin’s potential as an asset as Goldman Sachs caught the ire of the community when it dubbed Bitcoin as not even an asset. Still, Grayscale is not listening as their total assets under management have risen to $3.8 billion, a nearly 50% increase over the year.
Most of this buying comes from institutional investors seeking exposure through 401k and pension plans pushing the narrative further that Bitocin is indeed an asset. But, Grayscale is taking thighs even further as Grayscale’s director of investor relations, Ray Sharif-Askary, revealed that $110 million worth of ETH has been purchased by the firm during 2020 so far.
A new arena
The world is clearly changing, and with it the markets and investment space is also looking to be quite a different place following the Covid-19 pandemic and its damage done to the economies and markets. This could be part of the reason that Grayscale is looking to buy up more Bitcoin.
It is not just Bitcoin though as Grayscale’s purchases of ETH are equal to 0.4% of Ethereum’s total market cap in the past five months. Sharif-Askary noted that over 38% of Grayscale’s current clients now hold more than one crypto asset, up significantly from roughly 9% as of 12 months ago.
“It is encouraging to investors diversify within the digital currency asset class, just like they would with any other traditional asset class,” she stated.
Over the same period, Grayscale has purchased $390 million in Bitcoin (BTC), equal to 0.2% of the market’s capitalization. The firm is reportedly buying BTC at a rate equal to 1.5 times the quantity of new Bitcoin created through mining.
Hedging the US policies
Many are now looking to what is happening in the US, and other countries, with their policies to try and avoid a recession, and this has many investors looking for a new asset class, and even a new crypto asset in that space.
“From a border perspective, COVID-19 and the policy implications especially have really set the stage for Bitcoin to become seen as a store of value asset. Institutional investors are taking active long positions in digital assets through our products, and it’s because they are looking for an asset that is scarce and that can be used as an inflation hedge in a world where we are faced with unprecedented monetary stimulus,” Sharif-Askary added.