Institutional investors have used the coronavirus crisis to buy cryptocurrencies

The first half of 2020 was affected by the unprecedented events of the COVID-19 coronavirus pandemic in the global economy. In the markets, we have witnessed a rapid and relatively sharp decline in stock markets . The rapid responsiveness of central banks and national governments has been able to ensure a large influx of money into the market. Thanks to that, we have not yet entered such a great recession, technological stock prices are even exceeding their maximums. However, in many cases, the money that was distributed did not go to specific consumption, but was used for investment. Detecting individuals’ money flows is not easy, but it is easier for large companies and funds.

Due to the huge printing of money, many investors have chosen alternative investments that are anti-inflationary. And cryptocurrencies are one of the alternatives.

The most interesting data from the Greyscale 2Q20 report

Greyscale Investment is the world’s largest digital asset manager, managing more than $ 4 billion as of June 30, 2020. In the following report, we reveal that institutional investors have used the coronavirus crisis in the financial markets to invest even more in cryptocurrencies.

I pulled it out of the most interesting 22-page report,  Digital Asset Investment Report from Investment Greyscale.

In 2Q 2020, Grayscale recorded the largest increase in new entrusted money, USD 905 million. Compared to the first quarter of 2020, this is almost double. For the first time in 6 months, he was entrusted with new funding totaling more than $ 1 billion.

Greyscale achieved his ATH in 2Q20. The annual appreciation is currently at 202% and cumulatively since its inception it is 179366%.

Greyscale buys almost all new Bitcoin

The Greyscale fund has been known for several years to accumulate primarily the cryptocurrency Bitcoin and literally buys some of the newly mined BTCs. During 2Q20, Greyscale bought 70% of all BTC mined.

After the halving of Bitcoin, Greyscale even intensified its activity in BTC purchases. The report states that after the halving in May, it was 118%, not only that Greyscale bought all the mined Bitcoin, but a little extra. Obviously someone doesn’t want to run away.

 

A growing number of new investors in the institutional cryptoworld

Greyscale fund is able to attract new investors. In 2Q20, the ratio of new and existing investors increased from 49% to 57%.

Investors want other cryptocurrencies, Bitcoin is not enough

Another interesting statistic is the increasing number of investors who invest in cryptoactive assets other than Bitcoin. Currently, 81% of clients invest in more cryptocurrencies. There is a degree of diversification. Rather than betting on a single winner, investors choose a small number of leading cryptocurrencies.

Apart from Bitcoin, Ethereum is the most popular cryptocurrency among institutional investors

This is followed by Ethereum Classic, Zcash, Bitcoin Cash and others.

The next chart shows how Greyscale bought cryptocurrencies over time.

The future lies in the diversification of cryptoactive assets

The Grayscale Digital Large Cap Fund, which is a mix of the most important cryptocurrencies (BTC, ETH, BCH, XRP, LTC, with about 80% BTC and 10% ETH), has become a popular product. Since the end of 2019, its share in the total portfolio has been increasing.

Over the last 12 months, there has been an increase in new capital going to individual cryptocurrencies under the Greyscale Fund. The most popular investment in cryptocurrencies is still Bitcoin, followed by Ethereum. Other cryptocurrencies grow much more slowly.

Who is a client of the Greyscale fund

Greyscale fund’s clients are mainly institutional investors, who make up more than 80%. Accredited investors are represented in the minority.

Retail investors do not have the opportunity to enter and share in any profits that Greyscale generates. A number of conditions are set for Family Offices.

What does all this mean for us?

The good news for all small individual investors is that cryptocurrencies are available for purchase through stock exchanges ( Coinmate , Binance and others). Cryptocurrencies democratize financial markets, and de facto entry is only necessary to verify their identity by uploading an ID document (and in some cases this is not necessary).

I know from experience that it is useful to monitor the activities of big players in the market. Greyscale is clearly one of the biggest players in the cryptocurrency market and can take a number of important questions with its actions.

For me, this report is further proof that institutional players are perceiving more and more cryptocurrencies and want to be in this trend . Due to regulations, it must invest through Greyscale Investment or similar funds. We, small investors, have an advantage in this (but on the other hand, security must be emphasized).

Bitcoin and Ethereum are two cryptocurrencies that have a place in the financial market in the future. They stop playing a role only for geeks, technology maniacs and traders. They are also beginning to get attention from the traditional financial world.

Other altcoins are risky and their representation in the portfolio should correspond to the investor’s strategy.

Greyscale Investment Fund’s regular purchases demonstrate the importance of constantly buying cryptocurrencies and a vision for the long-term growth of these assets. There is no need to speculate on buying or selling or dealing with day trading.

Cryptocurrencies are an alternative investment (very risky) with the property of being anti-inflationary. The more new money, dollars and euros, is printed, the more people will think about whether there is an alternative that does not devalue the currency.