There’s no doubt the crypto industry has shrunk since the March 12th “Black Thursday” crash, with industry firms laying off employees, Bitcoin traders throwing in the towel, and the market capitalization of the space shrinking.
But recently released data from a leading cryptocurrency fund suggests that demand for Bitcoin and other digital assets remains high.
Grayscale Sees Biggest Quarter Yet For Its Crypto Funds
According to the Q1 2020 investment report from Grayscale Investments, the crypto-fund arm of Digital Currency Group, the firm saw its biggest quarter ever, easily eclipsing the December 2017 highs and approximately doubling last month’s inflows.
The firm brought in a $503.7 million in the last quarter, with most of the capital allocated in Grayscale’s two flagship funds: the Bitcoin Trust and the Ethereum Trust, which trade on public over-the-counter markets under GBTC and ETH, respectively.
Grayscale's quarterly report has just hit the wire:
– Inflows into its various cryptocurrency funds soared to an all-time high of $503.7 million.
-More than $1 billion was raised in last 12 months.
– 88% of investors were institutions pic.twitter.com/3sMMvk6OJ6
— Frank Chaparro (@fintechfrank) April 16, 2020
It’s important to note that a good portion of the inflows took place during the January and February rally. However, even after the “Black Thursday” crash, the fund saw double-digit million weeks, showing that there remains demand.
What’s especially interesting about this statistic is the makeup of investors that bought the product.
Although it isn’t exactly clear how Grayscale gets its data, the fund signaled that 88% of the $500 million in inflows came from institutional accounts, with multi-strat hedge funds, global market funds, and other categories of funds showing interest in crypto.
To be fair, it is relatively hard for retail investors to access Grayscale’s trust products due to capital restrictions and the platforms the assets are available on, but the institutional skew is a positive sign to see.
What’s Behind the Surge In Demand?
Although it isn’t clear what exactly caused this increase in interest by investors around the world, data suggests it has at least a little something to do with the imminent block reward halving for Bitcoin, slated to take place in just under 30 days according to most estimates.
Furthermore, Google projects that the upcoming month will see demand for the search term double from the current numbers.
As a pertinent note: Google Trends determines “interest” in a term by scoring search volumes of a term from 0-100, with 100 being the highest amount of interest the term has seen over a given time span and region.
The booming interest in the halving has been confirmed to me on an anecdotal level.
As aforementioned in a previous Blockonomi article, my nearly-90-year-old grandfather called me up a few weekends ago, asking if I could digitally walk him through how he could buy “a little bit of” Bitcoin and Ethereum and how he could store the cryptocurrency. He cited news of the halving as a catalyst for his interest.
Furthermore, according to industry outlet The Block, discussion about Bitcoin’s growing status as a store of value and as a form of digital gold has started to percolate institutional investor circles so much that it is spawning interest in cryptocurrency investing.