November 17, 2019 Finance and Tech Publication

Grayscale Posts Record Quarter Despite Slump in Bitcoin Prices

Grayscale Investments, one of the world’s leading digital asset management companies, has reported a new milestone.

According to a quarterly report, the New York–based firm announced inflows of $254.9 million in net investments, a new record for a single quarter that tripled the $85 million it accrued in the preceding quarter. 

Michael Sonnenshein, the managing director of Grayscale, told Fortune that the new record is a reflection of increasing interest from professional investors, who now see cryptocurrencies as a viable option in their investment portfolios. Grayscale noted that 84 percent of its third-quarter investments came from institutions. 

Sonnenshein credited the firm’s “Drop Gold” advertising campaign as a reason for the surge in interest from institutions. Grayscale ran the “Drop Gold” advertorial in May 2019, encouraging investors to ditch gold in favor of bitcoin.

“When the world gets to be the way it is at the moment, these institutions want a new source of alpha,” Sonnenshein told Fortune, referring to a historic measure of an asset’s return on investment. “There’s also a growing acceptance that younger generations want a part of this asset class.”

Rising Bitcoin Interest From Institutions 

This marked increase in institutional investment may seem dramatic, but it is actually part of a trend that Grayscale has been benefiting from for some time.

On May 13, 2019, Grayscale released its Digital Asset Management Report for Q1 2019, which showed that it had received an average of $3.2 million per week in its Bitcoin Investment Trust (BIT). It also revealed that Grayscale received a 2,400 percent increase in investments from institutions. The total institutional investments, primarily coming from hedge funds, was less than $1 million in 2018 and grew to a staggering $24 million during Q1 2019. 

Bitcoin Is King

As with past reports, the company’s bitcoin-based products seem to be getting the majority of the love from investors. Grayscale reported that in Q3 2019, two-thirds of the investments secured were for BIT, $171.7 million in inflows. The remainder was shared among its non-bitcoin products, such as the Grayscale Ethereum Trust. 

On October 14, 2019, Grayscale got the green light to sell shares of its publicly traded cryptocurrency index on over-the-counter markets. Dubbed the Digital Large Cap Fund (DLC), the new product will be available to accredited investors in the U.S. and traded under the initials GDLCF. DLC is Grayscale’s fourth publicly quoted investment product.

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