Since the start of the year, Bitcoin has been in an upward trajectory which gets stronger as the year progresses. Grayscale clients have begun to take notice and the effect may be trickling down.
Grayscale Clients From Retail To Institutional
Although the crypto sector is dominated by retail traders, institutional traders have been increasing their interest in the industry. A report by Grayscale, an investment firm, through its Digital Asset Investment Report, has confirmed the increase in virtual currency uptake by institutional investors in the first three months of 2019.
As per the report, institutions, especially, hedge funds, increased their investments into the crypto industry.
For instance, in the last three months of 2018, hedge funds only made investments not exceeding 1 million U.S dollars in Grayscale products. But, in the first three months of 2019, the same funds invested 24 million U.S dollars. This accounted for over 55 percent of investments made to Grayscale in the first quarter. Consequently, this led to a quarter-over-quarter rise of 42 percent to reach 42.7 million U.S dollars in product inflows.
According to Grayscale:
“[It] experienced a 42% uptick in product inflows quarter-over-quarter, from $30.1 million in 4Q18 to $42.7 million in 1Q19. Notably, hedge funds ramped up their investments substantially, from less than $1 million in 4Q18 to approximately $24 million in 1Q19.”
Interestingly and almost predictably, 99 percent of Grayscale clients were interested in Bitcoin just as small scale crypto traders are pretty much doing right now. Only 1 percent of Grayscale clients’ funds accounted for non-Bitcoin inflows.
“Nearly all inflows in Q1 were into Grayscale Bitcoin Trust (99%). One possible explanation for this is that Bitcoin found a ‘sweet spot’ with respect to relative risk and return expectations versus other digital assets.”
Apart from Bitcoin surging in price since the beginning of the year, it is also commanding back its share of the entire cryptocurrency market which currently stands at 60 percent. The remaining 40 percent is shared amongst altcoins. However, for Grayscale, such a high number of its clients investing in Bitcoin is not a good omen; the investment firm has an altcoin-specific index fund aimed at these investors who are seemingly not interested in altcoins.