2020-5-21 21:00 |
The widespread money printing that has come about as a result of the Coronavirus pandemic will eventually lead to massive inflation rates for fiat currencies Although the crypto market’s participants have long seen digital currencies as a way to escape the impacts of this, it now appears that “smart money” is taking notice as well The managing director for Grayscale Investments is now noting that his company’s regulated crypto funds are seeing unprecedented inflows Bitcoin and the aggregated crypto market have fared quite well in spite of the weakness seen across the global markets. The benchmark cryptocurrency’s recent uptrend has allowed it to be one of the best performing assets in the world in 2020, with its uptrend partially being driven by news of legendary investors like Paul Tudor Jones adding it to their portfolios. He isn’t the only traditional investor who is taking to Bitcoin to hedge his portfolio against inflation risk either. Recent comments from the managing director of Grayscale Investments elucidate that family offices, RIAs, hedge funds, and others are flooding into crypto at a rapid rate. Grayscale Managing Director: Inbound Interest in Crypto from “Smart Money” is Immense Many investors as of late have been pointing to the growing open interest seen while looking towards the CME’s Bitcoin futures as a sign of increased activity amongst institutions within the market. The line of reasoning is quite simple: because there is a divergence between open interest and trading volume, the majority of these investors are taking a passive approach to BTC futures, employing them to gain exposure to the crypto’s price action. This trend can be clearly seen while looking towards the data on the below chart: Image Courtesy of Skew Recent comments from Grayscale Investment’s managing director Michael Sonnenshein seem to further confirm the heightened activity seen amongst institutions and other forms of so-called “smart money” within the nascent crypto market. He explained that his company has seen a massive inflow in interest from these parties in the time following the Coronavirus pandemic. “It’s remarkable how much inbound interest we’ve received at [Grayscale], particularly since the COVID pandemic, from HNWIs, RIAs, FAs, Family Offices, and Hedge Funds – investors *aren’t waiting* for economic stability before adding #crypto to their portfolios,” he noted. Institutional Interest Was Here Before the Pandemic as Well The ongoing global pandemic isn’t the only factor that has driven institutional adoption. Per Grayscale’s first quarter report, it appears that the crypto market was notable seeing institutional adoption prior to the spread of COVID-19. They noted that throughout Q1, their investment products saw a total inflow of $503.7 million. Investors were, on average, pouring $38.7 million into their crypto funds each week. Although it still remains unknown as to what their inflows looked like in Q2 – it is highly likely that it will dwarf the record-breaking growth their products saw last quarter. Featured image from Shutterstock.
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