Bitcoin’s epic 2017 rally, which saw the bitcoin price rise from under $1,000 per bitcoin to almost $20,000 in fewer than 12 months, was largely put down to expectations institutional money was poised to flow into bitcoin and crypto markets—though some disagree.
The subsequent bitcoin price collapse, branded crypto winter for its debilitating effect on the burgeoning sector, came as the world’s biggest banks and money managers appeared to remain on the sidelines of the bitcoin and crypto market.
Now, with bitcoin and cryptocurrency asset manager Grayscale revealing inflows of $600 million in 2019, more than 2013 through 2018 combined, institutional money seems to have finally arrived—just as bitcoin records its strongest start to a new year since 2012.
Grayscale has announced it raised $607 million in 2019, with cumulative investment across all of its products reaching $1.17 billion.
The New York-based digital asset manager, which claims to be the world’s largest, saw $193 million invested in its flagship Grayscale Bitcoin Trust, a publicly tradable bitcoin and cryptocurrency investment vehicle, in the last quarter of 2019, its best quarter on record.
Meanwhile, $147 million of the year’s investment came from new clients—24% of the total.
“If the persistent question is ‘where are the institutions investors in crypto?’ the answer is that they’re here and showing up in a meaningful size,” Michael Sonnenshein, managing director at Grayscale, said on the sidelines of the Crypto Finance Conference in Switzerland.
“With 71% of assets raised into Grayscale products during 2019 coming from institutions, we now have empirical data that this is part of a longer term trend–one that we have no reason to believe won’t be sustained into 2020.”
Grayscale’s investors are typically traditional hedge funds, pensions and endowments, with institutions like hedge funds making up the majority, some 71%, up from 66% in 2018.
Grayscales thumping year comes after a report last month found Grayscale Investments Bitcoin Trust is among the top five equity holdings for Millennials, next to technology giants Amazon, Apple, Tesla and Facebook—and ahead of investor darlings Netflix and Microsoft.
Grayscale’s 2019 inflows were greater than the years 2013 to 2018 combined, with its flagship
The bitcoin price climbed earlier this year after an escalation of tensions between the U.S. and Iran, leading some to claim bitcoin has begun acting as a so-called safe haven asset like gold—though others are unconvinced bitcoin will consistently see its price rise in times of uncertainty.
“While gold and bitcoin share many attributes, bitcoin outshines gold given that it is more divisible, portable and has greater utility,” Sonnenshein said. “Bitcoin is digital gold and forward-thinking investors must pay attention to the shift away from antiquated ideas of gold serving as a store of value or inflation hedge in their portfolios.”