Grayscale inflows hit $3.3B in record-breaking fourth quarter

Institutional investors continued to pile into Grayscale products in the fourth quarter, highlighting the continued urgency for exposure to Bitcoin (BTC) and Ethereum (ETH) 

Total investments into Grayscale’s family of products reached $3.3 billion in the final quarter of 2020, which translated into average weekly inflows of $250.7 million, the digital-asset manager reported Thursday. That’s a threefold increase from the third quarter when Grayscale products raked in $1.05 billion.

Grayscale’s Bitcoin Trust generated $217.1 million in average weekly inflows. The Ethereum Trust saw an average of $26.3 million in new capital invested.

Ninety-three percent of new investments came from institutional investors, with asset managers accounting for the largest share, according to Grayscale. That’s a nine percentage point increase from the third quarter when institutions accounted for 84% of new capital.

In all of 2020, investments into Grayscale products totaled $5.7 billion. That’s more than four times the cumulative inflow between 2013 and 2019.

"2020 saw some of the world's most influential investors publicly support digital currencies as an asset class and some of the largest institutional investors and corporations allocating to Bitcoin," Grayscale told Cointelegraph, adding:

"The macroeconomic backdrop and monetary stimulus further solidified the perspective that Bitcoin is a form of digital gold." 

Grayscale’s data reflect a turning point for Bitcoin in 2020, as smart-money investors began to view the digital asset as an inflationary hedge and long-term store of value. That narrative helped propel Bitcoin to a price of nearly $42,000 in early January after more than doubling in just three weeks.

Institutional adoption of Bitcoin has put the asset on a path to maturity, according to Goldman Sachs executive Jeff Currie. However, he acknowledged that Bitcoin still has a long way to go before it’s considered an institutional-grade asset.

The bull market could be given added impetus in the coming weeks as the incoming Biden administration prepares a multi-trillion-dollar stimulus program. The considerable devaluation of the U.S. dollar is pushing more investors into Bitcoin.