The emergence of new regulations continues to fuel an influx of institutional capital in the cryptocurrency sector. In its H1 2018 report, Grayscale Investments revealed that the majority of cryptocurrency investments are coming from institutional investors.
Rising Institutional Investor Interest
Based in New York, Grayscale Investments is one of the largest digital currency investment firms with $248.39 million in financial products holding cryptocurrencies, according to their H1 2018 report.
Revealed in their H1 2018 report, Grayscale showed that 56% of incoming capital came from institutional investors – indicating rising popularity from firms and individuals with deeper pockets despite a persisting market downturn.
Stated in the report, Grayscale mentions:
“As the investment community knows, over the last six months, the digital asset market experienced one of the largest price drawdowns since the inception of Bitcoin in 2009. However, what is more interesting, and somewhat counterintuitive, is that the pace of investment into Grayscale products has accelerated to a level that we have not seen before.”
The first half of 2018 has indicated a clear influx of new institutional capital, rising at a pace contrary to the price action of cryptocurrencies following its peak in December 2017.
“In fact, we raised nearly $250 million in new assets in the first half of this year, marking the strongest inflows of any six month period in the history of our business.”
Grayscale reported an average weekly investment in single-asset and diversified cryptocurrency products at $9.55 million, citing “fresh inflows during each week of 2018.”
Grayscale Products Offering Custodial Solutions to Crypto Investing
Over the years, Grayscale has introduced several single-asset investment products to public stock markets, including the Bitcoin Investment Trust and Ethereum Investment Trust. Such funds allow investors to gain exposure to the price movement of digital assets without having to directly buy, sell or store it themselves.
Grayscale’s flagship diversified investment offering, Digital Large Cap Fund comprises of Bitcoin, Ethereum, XRP, Bitcoin Cash, and Litecoin – collectively making up over 70% of the entire cryptocurrency market.
Through shares traded on the public OTC markets, Grayscale offers institutional investors key safeguards against direct cryptocurrency investing, avoiding the safekeeping of private keys and eliminating the risk of exchange hacks.
The steady growth in incoming institutional capital indicates a maturing cryptocurrency market coming into legitimization.
With emerging regulation, it is likely that more institutions will follow as regulated channels of cryptocurrency investment become readily available.
Reported on July 16, BlackRock revealed plans to explore cryptocurrency and blockchain investments, marking the potential entrance of the largest asset management firm in the world with over $6.28 trillion in assets under management.
Cover Photo by Vidar Nordli-Mathisen on Unsplash
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