The markets may indicate otherwise as day traders turn bearish and start to sell again. But institutional investment products such as the Grayscale crypto trusts are growing in popularity as its latest performance report proves.
Since their peak this year, crypto markets have lost $160 billion in terms of capitalization as the selloff continues. That figure is larger than the entire cap for Bitcoin at the moment, which also appears to be heading into another bear market if technical indicators ring true.
Not all is doom and gloom however and the smart money has been slowly accumulating in the form of crypto trusts. According to Grayscale Investments’ latest Q3 performance report inflows marked the strongest demand for the firm’s products since its inception.
The total investment into all of the company’s crypto trusts was $254.9 million, its highest ever quarter. The report added that inflows have tripled quarter-over-quarter, from $84.8 to current levels. This has occurred despite recent declines in Bitcoin and crypto asset prices.
The key take is that 84% of that capital inflow came from institutional investors dominated by hedge funds. A similar figure of 83% shows that institutions have dominated investment into crypto trusts so far in 2019.
The impressive quarter billion figure accounts for all of the firm’s crypto products combined. Breaking it down shows that the BTC Trust was clearly the most popular by a huge margin.
“In 3Q19, we saw the heaviest quarterly inflows to Grayscale Bitcoin Trust in the product’s six-year history, including nearly $75 million in a single day.”
The total investment for the quarter was $171.7 million, or 67% of the total. December 2017 and July 2019 were also big months for BTC Trust inflow, and peak price months for Bitcoin.
Grayscale’s Ethereum Trust also performed well with over $100 million invested so far this year.
“We’ve now seen $104.4 million flow into Grayscale Products ex Bitcoin Trust this year, led by Grayscale Ethereum Trust ($77 million) and Grayscale Ethereum Classic Trust ($24.9 million).”
All eyes were on the Bakkt futures launch but this only provides a platform for traders to bet on a future price of a crypto asset. Its underwhelming launch did not do many favours for retail markets which have remained in decline since.
Grayscale enables investors to gain exposure to the price movement of Bitcoin through a traditional investment vehicle. It removes the technicalities of dealing with exchanges and wallets and is clearly a popular product.