New Grayscale Report: Digital Assets Fund Adds $905M in Record Quarter

Grayscale Investments has just released its quarterly report which shows that institutional demand for Bitcoin and other digital assets is still on the rise despite the lack of action from Bitcoin price (BTC). The report shows that Grayscale had yet another record quarter for its digital asset products with $905.8 million dollars invested over that time period.

The nearly $1 billion inflow means Grayscale almost doubled its previous high of $503.7 in the first quarter of 2020. Out of the total amount of funds accrued by Grayscale, Bitcoin continued to lead the pack with 82.92% or $751.1 million invested in Grayscale Bitcoin Trust (GBTC).

Institutional investors lead the pack

Institutional investors continue to be the leading demographic of Grayscale’s digital asset trusts. Currently they account for 84% of investment in the second quarter of 2020. 

However, Grayscale saw a significant increase in new investors which represented 57% of the Grayscale investor base during the quarter. 

While the percentage of new investors has increased, they only accounted for $124.1 million of the inflow into the Grayscale digital asset products.

New Grayscale Investors Q2 2020. Source: Grayscale

Institutions are jumping into altcoins

While new investors made up a large percentage of the investment coming into the Grayscale products, returning institutional investors also expanded into other assets. This is likely due to the record-low volatility currently seen in the Bitcoin price. 

Currently, around 81% of investors have diversified their portfolio into alternative digital assets. The report reads: 

“While long volatility was the winning trade in 1Q20, volatility was subdued in 2Q20 as risk assets steadily recovered. In 2Q20, digital assets outperformed most indices, and Zcash, Ethereum, and Stellar led the way returning 72%, 62%, and 62%, respectively.”

The Grayscale Ether trust (ETHE) has seen a significant increase in inflows, having received a record-breaking $135.2 million in investment during this quarter. 

This accounts for around 15% of the total inflow into Grayscale’s investment products, which may be the higher premiums in ETHE and the arbitrage opportunity it creates for institutions and accredited investors. Data also shows that while Bitcoin volumes have been dwindling, Ether’s have been rising.