Grayscale Mid-Year Report: Institutions have increased their positions in ETH, LTC, and BCH significantly, and the pace of entry has increased rapidly
The "Digital Asset Investment Report" (Digital Asset Investment Report) was compiled by Grayscale Investment and released in July 2020. The report reviewed Grayscale Investment's asset management in Q2 2020 and the past 12 months. The report is detailed, with charts Numerous and rich data, it comprehensively shows the investment history of Grayscale Investment in Q2 2020 and the past 12 months. Through these data, we can also see the changes of Grayscale Investment since its establishment in 2013. The most eye-catching data is Grayscale Investment. In Q2 of 2020, 118% of the total Bitcoin mining volume was bought after the reduction of Bitcoin production, followed by a substantial increase in ETH, BCH, and LTC.
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Summary of Report Highlights
Overview of Q2 2020:
Total investment: US$905.8 million;
Average weekly investment: $69.7 million;
GBTC weekly average investment: $57.8 million;
ETHE weekly average investment: $10.4 million;
Weekly average investment outside GBTC: $11.9 million;
84% of the funds came from institutional investors, mainly hedge funds.
Overview of the first half of 2020:
Total investment: US$1.4 billion;
Average weekly investment: $54.2 million;
GBTC weekly average investment: $43.8 million;
ETHE weekly average investment: $9.4 million;
Weekly average investment outside GBTC: $10.4 million;
85% of the funds come from institutional investors, mainly hedge funds.
12-month overview:
Total investment: US$1.9 billion;
Average weekly investment: $36.3 million;
GBTC weekly average investment: $28.9 million;
ETHE weekly average investment: $6.3 million;
Weekly average investment outside GBTC: $7.4 million;
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Report Highlights
1) In the first half of 2020 (1H20), the capital exceeds US$1 billion and the largest single-quarter increase (Billion Dollar 1H20 and Largest Quarterly Raise):
Fund inflows in Q2 were $905.8 million, nearly double the $503.7 million in Q1. For the first time in a six-month period, inflows into Grayscale products crossed the $1 billion mark, showing continued demand for crypto assets despite significant economic uncertainty.
Since its inception, the cumulative investment in Grayscale’s series of products has reached US$2.6 billion, of which the quarterly inflows of GBTC and ETHE have both set historical records, at US$751.1 million and US$135.2 million, respectively.
2) Grayscale GBTC inflows exceeded the number of newly mined Bitcoins (Grayscale Bitcoin Trust Inflows Exceeded Magnitude of Newly-Mined Bitcoin):
Bitcoin was halved in May this year, and the funds flowing into Grayscale’s Bitcoin trust in Q2 exceeded the amount of mining in the same period. This is definitely the biggest positive for Bitcoin’s price increase relative to newly mined Bitcoins.
3) New investors are increasing, and institutional investors are interested in multiple products (New Investor Interest and Multi-Product Institutional Investors):
In Q2 2020, the inflow of funds from new investors was US$124.1 million, accounting for 57% of the total number of investors, up from 49% in the same period last year. On the whole, 81% of institutional investors in Q2 have allocated funds to a variety of products, an increase of 71% from the US$12 million in Q2.
4) Other assets continue to maintain growth momentum (Alternatives Continue to Gain Momentum):
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Quarterly Perspective
Although the long-term volatility prevailed in Q1 of 2020, such as the short-term surge and plunge such as the 3.12 black swan event, with the steady recovery of asset prices, volatility weakened in Q2. In Q2 2020, encrypted assets performed better than most indexes (including Nasdaq, S&P 500, Dow Jones, etc.), Zcash, Ethereum and Stellar returned 72%, 62% and 62% respectively. (figure 1)
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The performance of each asset class in Q2 2020
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Since its establishment in 2013, the trend of Grayscale asset scale change
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Comparison of the amount of Bitcoin flowing into Grayscale Trust and the amount of Bitcoin mining in the same period
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After the Bitcoin production reduction, the grayscale locked part VS the inflow part
As crypto assets gain traction in the investment community, new investors accounted for 57% of Grayscale investors in the second quarter, a sharp jump from the trailing 12-month average. (Figure 5)
The returning institutional investor base continues to explore a variety of Grayscale products. In Q2, 81% of returning institutional investors invested in multiple products. (Figure 6)
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Since its establishment, the cumulative inflow of various assets in Grayscale
Figure 8 shows the grayscale series of investment products inflows as a percentage of assets under management.
This metric serves as a measure of the investability of cryptoassets, which could have a significant impact on future price movements. Investors believe that the result of massive capital inflows is that prices must soar.
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Assets flowing into Grayscale as a percentage of assets under management since inception
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Ethereum Classic Trust (ETCG) and Digital Large Cap Fund (GDLC) Inflows
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BCH Trust (BCHG) and LTC Trust (LTCN) Fund Inflows
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Investment Activity through the Grayscale Lens
1) Grayscale raised $905.8 million in 2020Q2 and $1.9 billion in the past 12 months.
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Fund inflows of different product categories in Q2 2020
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Fund inflows by product category over the past 12 months
2) In Q2 2020, the average weekly investment amount for all products was US$69.7 million; in the past 12 months, the average weekly investment amount was US$36.3 million.
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In Q2 2020, the weekly capital inflows of different investment products of Grayscale
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In the past 12 months, the weekly capital inflow of different investment products of Grayscale
3) In Q2 2020, Grayscale GBTC’s capital inflow reached a record high of US$751.1 million, surpassing the highest level of US$388.9 million in the previous quarter. This brings GBTC inflows to $1.5 billion over the past 12 months.
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2020 Q2, GBTC weekly cumulative inflow
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In the past 12 months, the cumulative weekly inflow of GBTC
4) In Q2 of 2020, the demand for Grayscale investment products, excluding GBTC, increased to US$154.7 million, an increase of 35% from the previous quarter, and an increase of more than 649% from Q2 in 2019. This increase was mainly due to the inflow of $135.2 million from ETHE (Grayscale Ethereum Trust) in Q2, which also brought the inflow of funds other than GBTC to $384.1 million in the past 12 months.
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In Q2 of 2020, Grayscale Trust’s weekly cumulative capital inflows except for GBTC
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Investor Profiles
1) In the second quarter of 2020, the capital of institutional investors accounted for 84% of the total capital inflow, and this trend has exceeded 81% in the past 12 months.
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Grayscale Investors by Type
2) In Q2 of 2020, overseas investors are the main source of funds, while historically, the proportion of domestic and overseas investors in the United States is more balanced.
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Conclusion
Against the global financial background of "Black Thursday" on March 12, the fund inflow of Grayscale Trust reached 905.8 million US dollars, and the funds raised in the first half of the year reached as much as 1.4 billion US dollars, setting a historical record for Grayscale financing . The large inflow of funds reflects the strong demand for encrypted assets from institutional and individual investors. In the second quarter, new investors accounted for 57% of the investor base, which is higher than the average of 49% in the past 12 months.
The underlying reason for such rapid growth is investors' growing desire to diversify their portfolios amid aggressive monetary and fiscal interventions triggered by the COVID-19 crisis.
While Grayscale GBTC has generated most of the demand from investors, other products are gaining momentum as well, indicating a growing trend towards diversification in the cryptocurrency asset class.
In Q2 2020, ETHE’s capital inflow exceeded $135 million, accounting for almost 15% of the total inflow of Grayscale products. The Ethereum Classic Trust and the Digital Large Cap Fund have recorded more than $50 million in inflows over the past 12 months. Grayscale Litecoin Trust and Grayscale Bitcoin Cash Trust have seen combined inflows of over $20 million since inception.
The inflow of funds in the past six months has exceeded the cumulative assets of the past six years. These historical data tell us that we must not ignore the changes in the views of institutional and individual investors on encrypted assets.
