The Bitcoin frenzy is driving a 900% surge in assets for crypto investment firm Grayscale | Currency News Financial and Business News

  • Investment firm Crypto Grayscale enjoyed a 900% surge in assets under management last year as a bitcoin rally drove multi-million dollar inflows.
  • The company’s assets ballooned to $ 20.2 billion from $ 2 billion in 2020, according to a report on Thursday. Grayscale Bitcoin Trust drove most of the inflows, growing to $ 17.5 billion AUM from $ 1.8 billion.
  • Warming institutional investors to bitcoin also helped the company. Such funds accounted for 86% of flows to Grayscale products in 2020, as well as 93% of all fourth-quarter inflows.
  • The company’s rapid expansion came as bitcoin spiked higher through late last year. Wider adoption and renewed interest from institutional investors saw the ticket surpass its 2017 peak in December and double over the next 22 days.
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Crypto investment company Grayscale saw assets under surge control ten times in 2020 as wider adoption of bitcoin drove billions to its trusts.

The company’s assets jumped to $ 20.2 billion from $ 2 billion last year, according to a quarterly report published Thursday. The Grayscale Bitcoin Trust managed to attract the majority of inflows, surging to $ 17.5 billion from $ 1.8 billion in assets under management as the popular price of the cryptocurrency increased higher. On average, the bitcoin trust took in $ 90 million a week.

Institutional investors’ renewed interest in cryptocurrencies also boosted the company. Such funds comprised 86% of all investment in Grayscale products through the year and 93% of all fourth-quarter inflows. Such funds largely turn to Grayscale crypto trusts for regulatory reasons instead of investing directly in digital tokens.

The average commitment from institutional investors also ballooned in the fourth quarter, climbing to $ 6.8 million from $ 2.9 million in the previous quarter.

Read more: $ 500 million crypto asset manager CIO breaks down 5 ways to price bitcoin and decide whether to own it after the digital asset breaks $ 40,000 for the first time

The inflows reflect the frenzied climb of cryptocurrencies through the last months of the year. Bitcoin ended 2020 up 303% and reached an all-time high of $ 41,940 last week. The cryptocurrency slipped through the beginning of the week but resumed its $ 40,000 support in trading early Thursday.

The rally began in the fall after MicroStrategy and Square revealed they had bought bitcoin and opened the door for other public companies to do the same. PayPal’s announcement that it would allow consumers to buy and sell cryptocurrencies raised prices further in late October.

Institutional investors then moved in on bitcoin, fearing they were missing out on the party. Others saw the ticket as an appealing alternative to gold and an effective hedge against inflation.

Eventually, institutional investors found plenty of reasons to pile up and over-raise the cryptocurrency boom. Bitcoin surpassed its record in 2017 in mid-December and doubled 22 days later. Grayscale said Thursday that it has also seen growing interest from wealth managers, a faction that is “vital for continued adoption.”

Read more: Cathie Wood’s ARK Invest runs 5 active ETFs that more than doubled in 2020. She and her analysts share their 2021 forecasts on the economy, bitcoin, and Tesla.

Still, new risks threaten to keep the crypto market rally from continuing through 2021. The SEC is expected to approve the first bitcoin exchange-traded fund this year. The move stands to end Grayscale’s “effective monopoly” on institutional investor flows and cash withdrawals from its trusts, JPMorgan analysts said Friday.

“A cascade of Bitcoin Trust’s Grayscale outflows and the collapse of its premium would likely have long-term negative implications for bitcoin,” they added in a note to clients.

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