One of the world’s largest digital asset managers has been making headlines on a weekly basis recently, with the latest reports showing that they’ve purchased over 16,244 Bitcoins – in a single day!
At market prices, this was about AUD$787 million, an absolutely jaw-dropping amount of money by anyone’s standards.
So who in the world is behind this huge Bitcoin accumulation?
It’s none other than Grayscale Investments, the largest digital currency manager in the world. Don’t mistake this for a one-off purchase, either. Their Bitcoin accumulation has extended much further than that single monstrous day of buying – in fact, they now own 3% of ALL bitcoin in circulation.
But why has Grayscale become so big, and what does it tell us about the current landscape for the Crypto market?
Grayscale Investment is a subsidiary of Digital Currency Group, which was founded by a well-recognised face in Crypto in Barry Silbert. Digital Currency Group is one of the biggest companies in the Crypto space and also owns Coindesk, a popular Crypto media outlet.
Grayscale itself has been around since 2013, but didn’t really pick up a huge amount of momentum until 2020 – and this is where the interesting part comes in.
Why did it take this long for Grayscale to see a windfall of investment, even though they were around for two other Bitcoin bull runs, including the monster run of 2017?
The answer appears to lie in the fact that they cater almost exclusively to institutional investors. Large companies, investment funds, and family offices are Grayscale’s main clients – people who deal in huge amounts of money, but also require someone else to take on the risk of buying and storing Bitcoin on their behalf.
Whereas the 2017 bull run appeared to be completely driven by retail investors (individuals, like you and I), the bull run from 2020 until now has, time and time again, been credited to institutional money.
Grayscale is undeniable proof of this, kicking off 2021 with a mind-blowing $20 billion in assets under management on behalf of institutional investors. Compare this to around only $300 million worth of assets held by Grayscale in 2017, which is a measly fraction of what they’re working with today.
Backing up this notion was a 2020 Forbes article, which published a list of more than 20 major institutions that had invested in Grayscale’s Bitcoin fund. Several of them bought a share of more than 10,000 Bitcoins each – hundreds of billions in investment each, from multiple companies.
It’s worth noting that Grayscale ALONE has been buying more Bitcoin than miners can produce, for several months now. In the last months, they actually purchased TWICE as much as miners have been producing.
Even more importantly, this is just a single digital asset manager. Several more are on the way, as I’ve covered in previous articles – BlackRock, Goldman Sachs, JPMorgan and more are still entering the game.
Institutional money is massive money. Investment funds and other major companies work with hundreds of millions of dollars, sometimes billions of dollars each. If just a handful of institutional money can take us to $50,000+ in a bull-run through Grayscale, just imagine what a real wave of institutional money will do.
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