Grayscale’s Record-Breaking Q2 Sees Influx of New Investors; GBTC Inflows 118% of BTC Mined


Grayscale reported yet another record quarter with the most massive quarterly inflows at $905.8 million in Q2 2020, a quarter characterized by unprecedented global events, which is almost double the inflows recorded in Q1 2020.

This demand shows investors are increasingly looking to diversify their portfolios amid aggressive monetary and fiscal intervention resulting from the COVID-19 crisis, reads the report. And the record inflows make it difficult to ignore the “shift in sentiment towards digital assets from individual and institutional investors alike,” it said.

Both Grayscale Bitcoin Trust (GBTC) and Grayscale Ethereum Trust (ETHE) had record quarterly inflows; the latter one accounted for 15% of total inflows into the Grayscale products. ETHE was the reason demand for Grayscale products excluding Bitcoin grew to $154.7 million in 2Q20, up 35% QoQ, and up over 649% from 2Q19.

Even Grayscale Litecoin Trust saw its largest inflows to date, while the one providing exposure to Bitcoin Cash had its largest inflow since 2Q18.

Grayscale AUM

Source: Grayscale

Also, inflows into Grayscale products over six months surpassed the $1 billion thresholds for the first time ever, “demonstrating sustained demand for digital asset exposure despite a backdrop characterized by economic uncertainty.”

According to Grayscale, GBTC inflows actually exceeded newly mined bitcoin, which was cut down by 50% post-halving, a phenomenon widely circulating in the market.

Apparently, inflows into GBTC were proportional to almost 70% of all Bitcoin mined during Q2 2020, which increased to 118% after Bitcoin completed its third halving in May 2020.

The company noted that this significant reduction in the supply-side pressure might be “a positive sign for Bitcoin price appreciation.”

Grayscale BTC Flows

Source: Grayscale

However, the company still did not mention how much of these purchases were “in-kind,” which was last disclosed at “58% of total quarterly contributions in 3Q18, 71% in 2Q19, and 79% in 3Q19.”

The positive thing is that $124 million of inflows were from new investors who made up 57% of its investor base while 81% were returning institutional investors. This time these investors were more heavily weighted to offshore investors.

Overall, the majority of the investment that is 85% came from institutional investors who were dominated by hedge funds.

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