Grayscale Institutional Buyers Doubling up on Bitcoin

Institutional buyers are increasing their exposure to Bitcoin (BTC) via Grayscale Investments suite of crypto trusts.

Grayscale Investors’ Bitcoin Appetite Unsated

According to data shared by crypto researcher Kevin Rooke via Twitter on Thursday (May 28, 2020), the firm’s bitcoin investment trust bought 18,910 BTC, although only 12,337 bitcoins were mined since BTC’s third halving on May 11. This figure indicates that Grayscale has bought almost twice the number of mined BTC since the last halving in May.

Grayscale's Bitcoin Trust bought 18,910 Bitcoins since the halving.

Only 12,337 Bitcoins have been mined since the halving.

Wall Street wants Bitcoin, and they don't care what Goldman Sachs has to say. pic.twitter.com/Br6a4ijuze

— Kevin Rooke (@kerooke) May 27, 2020

The increased institutional appetite for bitcoin among Grayscale investors comes at a time when Wall Street giant, Goldman Sachs, dropped the over flogged narrative of bitcoin not being an asset class. 

Goldman Sachs made the above declaration in one of its client calls published on May 27, 2020. According to the bank, the inability to generate cash flows and high volatility were some of the reasons why the BTC fell out of the asset class. Furthermore, bitcoin was not considered a suitable investment choice for its clients. 

Goldman Sachs’ 2014-era FUD aside, Grayscale Bitcoin Trust (GBTC) is seeing increasing institutional exposure to the top-ranked crypto by market capitalization. A previous report earlier in May 2020 showed that in 100 days, the number of bitcoins held in GBTC was 60,762, indicating a rapid increase in BTC holding. 

GBTC’s current institutional Bitcoin buying figures are a continuation of the trend seen in 2019. Last year, GBTC saw a total investment inflow north of $607 million, an amount far exceeding the figures realized in the five previous years.

Increased Bitcoin Investment Across the Board

There is also an increased appetite for Ethereum (ETH) according to a report on BTCManager in April 2020. The report noted that Grayscale institutional investors bought almost half of the ETH mined since the beginning of 2020. Back in January 2020, the company obtained a license from the U.S. Securities and Exchange Commission to function as a reporting company. 

Apart from increased BTC buying among institutional investors, there has also been a significant rise in bitcoin purchases among retail traders. A report in April 2020 showed that the number of wallet addresses with small BTC holdings continues to increase. 

Apart from increased buying, HODLing appears to also be a growing trend. Data from crypto analytics firm Coin Metrics is showing Bitcoin’s 1-year HODL factor at an all-time high indicating more BTC bagholders preferring to keep their hoard rather than spend their ‘coins.’