Grayscale continues to attract institutional money in 2021 after reporting a staggering $3.3 billion inflows during Q4 2020. Last week, the digital asset manager purchased nearly 10K Bitcoins worth over $300 million.
Cryptocurrency asset management giant Grayscale is making bold moves once again and is continuing its Bitcoin story. Grayscale’s newly appointed CEO Michael Sonnehnshein recently stated that the firm has raised $700 million last Friday, January 15.
Yesterday, @Grayscale raised north of $700 million into its family of products…momentum from Q4 seems to picking up speed into the new year.
If you haven’t checked out our 4Q20 report yet: https://t.co/SwqBKwvO1S
— Michael Sonnenshein (@Sonnenshein) January 16, 2021
The digital asset manager released its Q4 2020 report stating that it had raised nearly $3.3 billion during this period. Also, the inflows in Grayscale products in Q4 alone accounted for more than 50% of the net $5.7 billion inflows last year. Grayscale also notes that inflows into the Grayscale Bitcoin Trust (GBTC) continue to grow as a percentage of the mined Bitcoin. During Q4 2020, “Bitcoin inflows were approximately 194% of mined Bitcoin”.
The report also mentions that the “Grayscale Bitcoin Trust accounted for 87% of all inflows to our product family, the highest proportion since 2Q17, further evidence of institutions looking to Bitcoin as a reserve asset”.
Bloomberg senior ETF analyst Eric Balchunas has compared Grayscale to the ARK investments. The analyst explained different similarities as both players seem to be defying trends. Besides, they also seem to be garnering more institutional interest for their products and services. In his Twitter post, Eric writes:
“The similarities are pretty amazing. I think both hung in relative oblivion for 3-4yrs, had like $2b 12mo ago ago and then boom, 10x increase. Both defy trends: ARK w stock picking and grayscale w very high fees and 20%+ premiums”.
Grayscale Goes on Bitcoin Buying Spree
Just as the Bitcoin (BTC) price continues to flirt between $35,000-$36,000, Grayscale seems to have resumed its BTC purchases once again. On the day that Grayscale CEO made the fundraising announcement, the Grayscale Bitcoin Trust (GBTC) purchased over 5K BTC for a staggering $190 million.
The GBTC has been buying Bitcoins for three consecutive days since January 14. As per data on Bybt.com, the digital asset manager purchased nearly 10K Bitcoins for a staggering $317 million. Interestingly, Grayscale’s BTC purchases are nearly 5 times the daily Bitcoins mined.
The speed at which institutions have been buying BTC since December 2020 and moving it to cold storage hint at an upcoming shortage supply for Bitcoins at the exchanges.
Over the past day, Grayscale bought 5.7X the daily amount of #Bitcoin mined. 5k BTC worth $189m.
Over the past 30 days, 67k BTC worth $2.5b left exchanges for hot/cold wallets.
With such limited supply but exponential demand, the price will soon have no choice but to go upwards pic.twitter.com/6q6FwmND44
— Bloqport (@Bloqport) January 16, 2021
However, having seen Bitcoin’s massive price volatility and price plunge, Wall Street investors have warned companies trying to seek exposure to the cryptocurrency. “It would be a red flag for investors if a corporation bought financial assets for speculation purposes unrelated to their core business,” JonesTrading chief market strategist Michael O’Rourke told Bloomberg.
It will be interesting to watch BTC’s next price action from here onwards. Probably, it might consolidate for a while around $35,000.
The illustrations were provided by Depositphotos.com
Bhushan is a FinTech enthusiast and holds a good flair in understanding financial markets. His interest in economics and finance draw his attention towards the new emerging Blockchain Technology and Cryptocurrency markets. He is continuously in a learning process and keeps himself motivated by sharing his acquired knowledge. In free time he reads thriller fictions novels and sometimes explore his culinary skills.
