The current size of the cryptocurrency market is about $200bn compared with $18bn at the start of 2017, proving that digital assets are moving ever closer to the mainstream.
Part of the impressive growth in the crypto asset sector is attributable to institutional investors moving their money into alternative investments, including Bitcoin and other crypto assets.
Inflationary policies by world governments, such as printing money and lowering interest rates, have forced more institutional players to seek crypto as a hedge against investment.
Numerous well-known mutual funds like Ark Invest and Horizon Kinetic currently boast billions of dollars in digital assets under management, showing a definite spike in institutional interest.
New players have also shown interest in joining the crypto space. For instance, JP Morgan recently changed its once critical stance on digital assets by revealing plans to invest $20M in a fundraising round for the blockchain consortium Consensys.
Similarly, CommerzVentures, Germany’s Commerzbank investment arm, disclosed that it invested in the digital asset security startup Curv.
Grayscale Leads the Way in Institutional Investment
Grayscale Bitcoin Trust (GBTC) has emerged as a leading investment vehicle for institutional players who wish to profit from potential Bitcoin price increases.
Since it was founded in 2014, GBTC has increased its investment holdings from $42.8M to approximately $4.5 billion this year, marking an uptick of about 10,000% over six years.
A few weeks ago, Grayscale Investments filed a quarterly report detailing that the firm’s Bitcoin Trust had surged by over $1.1 billion as of June 30 of this year.
The latest report seems to suggest that each quarter brings Grayscale’sGrayscale’s digital assets under management (AUM) to new all-time highs. One Reddit user even commented that Grayscale investment purchased 5,973 BTC in just five days at the start of August.
That latest purchase now brings Grayscale’sGrayscale’s Bitcoin Trust to a massive $4.6 billion assets under management.
The growing interest crypto among institutional players was highlighted in a recent report by Fidelity Digital Assets.
The firm conducted a survey starting from November 2019 to March 2020 to better understand institutional interest and adoption of cryptocurrencies.
Their findings revealed that about 80% of institutional players in Europe and the U.S find digital assets appealing, prompting Fidelity Digital Assets CEO Tom Jessop to remark:
“These results confirm a trend we are seeing in the market towards greater interest in and accepting digital assets as a new investable asset class.”
More Investors Turn to Crypto amid Market Turbulence
Investors globally are increasingly seeing the need to include digital assets into their portfolio, mainly due to their uncorrelation with traditional assets in times of market uncertainty.
Several prominent hedge fund investors such as Paul Tudor Jones have promoted BTC investment and even invested large sums into the flagship digital asset.
CoinShares, Europe’s most prominent digital asset manager, is the latest institution to register AUM’s rapid growth with a record $1 billion in assets now under its cluster of crypto exchange-traded products (ETPs).
Evidently, institutional adoption of BTC and other crypto assets is already here, attesting to the work cryptocurrency advocates have put in to build a credible ecosystem suited for mass acceptance.