“We’ve started to see participation not just from the hedge fund segment, which we’ve long seen participation from, but now it’s recently from other institutions, pensions and endowments. […] The sizes of allocations they are making are growing rapidly as well.”
It has been reported that Grayscale has been at the center of the Bitcoin (BTC) buying spree and now holds around 3% of the BTC in circulation. The fund manager continues to accumulate large positions in the digital asset as more institutional investors seek exposure to Bitcoin.
The report said that its total assets under management (AUM) have eclipsed $27 billion across 10 different products. The Grayscale Bitcoin Trust remains by far its most popular product, with over $23 billion in AUM. Grayscale’s Ethereum trust is currently valued at around $3.6 billion, while its Digital Large Cap Fund holds nearly $339 million.
It has been analyzed that pension funds are following a hoard of institutional buyers that began entering the Bitcoin market in 2020. A survey conducted by Fidelity Investments last year found that 36% of financial institutions across the United States and Europe said they own cryptocurrencies or derivatives.
Over one-quarter of the respondents reported holding Bitcoin, while 11% said they own Ether (ETH).
According to Grayscale Investments, the institutional influx into cryptocurrency and Bitcoin is intensifying with pension funds and endowments among the most recent entrants into space.
Grayscale’s aggressive BTC buying is likely contributing to the digital currency’s rapid price appreciation. With more Bitcoin taken out of circulation, the already scarce asset is becoming even more difficult to come by.
Thus, Sonnenshein explained:
“This is a verifiable scarce asset and so when there are mechanisms that are removing them from circulation, that’s inherently making it an even scarcer asset.”