Cryptocurrency Market Rally Pushes Grayscale’s AUM to Skyrocket to $5.1 Billion
As Bitcoin rallies, so do the companies dealing with the cryptocurrencies.
Crypto management company Grayscale Investments is seeing its assets under management surging past $5 billion.
In 2013, everybody thought we were crazy for launching a bitcoin investment fund
Well, look at us now… https://t.co/gVbMfnHWHa
— Barry Silbert (@barrysilbert) July 28, 2020
Grayscale’s bitcoin product GBTC accounts for the majority of this AUM at over $4.3 billion, followed by its Ethereum product ETHE at $581 million. At $80 million, Grayscale Ethereum Classic Trust accounts for more of this fund than Grayscale Digital Large Cap Fund at $43 million that includes Bitcoin and other products such as Bitcoin Cash Trust ($12.8 million) and Zcash Trust ($12.2 million).
Its other products include Litecoin Trust ($8.9 million), Horizon Trust ($3.5 million), XRP Trust ($3.4 million), and Stellar Lumens trust ($0.5 million).
Eye-popping moves are now made by top digital assets as inflation expectations rise, and the US dollar gets under pressure. Bitcoin jumped in value just as the yellow metal rose to a new all-time high, which has led the digital currency to be a “digital gold” narrative getting traction.
According to Bloomberg, the move by bitcoin, gold, and stocks are interconnected in the light of unprecedented stimulus measures.
Bitcoin “got a boost on the notion that it’s an alternative investment that should act as a hedge against inflation and provide uncorrelated market returns,” it said.
This has been while we are in a recession, which is not a textbook one as such, we see “much more erratic performance and behavior in the market,” said Amanda Agati, chief investment strategist at PNC Financial Services Group.
The inflation debate is also heating up although the Federal Reserve has pledged to keep rates low, real interest rates have actually dropped into negative territory. Breakeven rates, which are a proxy for an anticipated annual increase in consumer prices, meanwhile have climbed higher in recent months from their decade-low levels. Gennadiy Goldberg, a senior U.S. rates strategist at TD, said,
“It’s largely a Fed-driven trade, both on expectations of more or longer-dated QE and expectations that stronger forward guidance will allow the Fed to overshoot inflation in the coming years.”
Amidst this, the US dollar is in free-fall as investors are fleeing the dollar in favor of traditional safe-haven assets like gold. The US dollar index is actually on track to its worst July in a decade.