The interest for Bitcoin has been constantly growing across various financial institutions. However, large traditional investors are interested in alternative coins as well.
Institutional investors like hedge funds are more positive towards cryptocurrencies as they were a year ago and tend to diversify their crypto investment portfolios.
Grayscale Investment, which is one of the biggest crypto management companies, revealed last week that 38% of its clients are currently holding more than one cryptocurrency. The number is over 4 times bigger compared to 9% as it was a year ago.
As Ray Sharif-Askary, the Director of Investor Relations and Business Development at Grayscale, explained on a Coinscrum markets podcast, Grayscale’s clients purchased nearly $110 million worth of Ether (ETH) during the past year. By comparison, Ethereum has gained a total investment of approximately $ 90 million over the past two years.
In Q1, we have raised half a billion dollars across all of our products - $390 million of that was into our Bitcoin Trust [...] We also saw about $110 million in the Ethereum product.
According to Grayscale’s official, the Grayscale Ethereum Investment Trust is seeing a sharp growth since May 28, when its stock price doubled and reached nearly $239.5 within a week.
Reportedly, the Ethereum Investment trust is the most popular investment product on Grayscale Investment together with the Grayscale Bitcoin Trust, the largest fund of its kind.
Institutional interest grows
The Grayscale’s Director of Investments admitted that a huge part (88%) of the company’s clients that are investing in cryptocurrencies are financial institutions like traditional hedge funds.
She additionally revealed the reasons why such investors are turning towards cryptocurrencies lately. According to her, institutional investors find cryptocurrencies as a hedge against inflation and unprecedented monetary stimulus:
Institutional investors are taking active long positions in digital assets through our products, and it's because they are looking for an asset that is scarce and that can be used as an inflation hedge in a world where we are faced with unprecedented monetary stimulus.
Furthermore, Sharif-Askary admitted the growing acceptance of Bitcoin as a store-of-value asset after the COVID-19 outbreak.
From a broader perspective, COVID-19, and the policy implications especially, have really set the stage for Bitcoin to be seen as the store-of-value asset that we had hoped it eventually would be.
The company has been in the center of attention of the crypto community lately, as it acquired a massive amount of Bitcoins after the halving event on May 11. The Grayscale Bitcoin Trust (GBTC) has purchased about 33-34% of all newly minted Bitcoins since then. The company is the biggest cryptocurrency investment manager and mostly deals with large institutional investors like hedge funds.
In the meantime, the global institutional interest in cryptocurrencies is growing. Nearly 40 banks in Germany have recently applied for the license of managing digital assets. Meanwhile, In Switzerland, the traditional private bank expanded its cryptocurrency services and launched digital asset trading and custody services for both institutional and private clients.