Grayscale Is Buying Up More Than Just Bitcoin

While great attention has been paid to the recent enormous accumulation activities of the Grayscale’s Bitcoin Investment Trust, or BIT, the crypto fund manager has also been aggressively growing its Ether (ETH) stash. 

Speaking on a recent episode of the Coinscrum markets podcast, Grayscale’s director of investor relations, Ray Sharif-Askary, revealed that $110 million worth of ETH has been purchased by the firm during 2020 so far.

Institutional investors diversify with ETH

As such, Grayscale’s purchases are equal to 0.4% of Ethereum's total market cap in the past five months. Sharif-Askary noted that over 38% of Grayscale’s current clients now hold more than one crypto asset, up significantly from roughly 9% as of 12 months ago.

“It is encouraging to investors [...] diversify within the digital currency asset class, just like they would with any other traditional asset class,” she stated.

Over the same period, Grayscale has purchased $390 million in Bitcoin (BTC), equal to 0.2% of the market’s capitalization. The firm is reportedly buying BTC at a rate equal to 1.5 times the quantity of new Bitcoin created through mining.

Grayscale Ethereum Trust explodes

Grayscale’s Ether accumulation has coincided with a dramatic year-to-date (YTD) performance for shares in the Grayscale Ethereum Trust, which have increased nearly 800% with the market’s last recorded trade closing for $210.

Grayscale Ethereum Trust/USD: TradingView

Within the last 24 hours, the trust briefly tested $250, offering YTD returns of 995% to investors who purchased shares at the start of January.

Institutions seek inflation hedge amid uncertainty

Sharif-Askary attributed Grayscale’s enormous crypto accumulation to institutions seeking a hedge fledge against inflation in response to U.S. monetary policy amid the COVID-19 crisis.

“From a border perspective, COVID-19 and the policy implications especially have really set the stage for Bitcoin to become seen as a store of value asset. [...] Institutional investors are taking active long positions in digital assets through our products, and it's because they are looking for an asset that is scarce and that can be used as an inflation hedge in a world where we are faced with unprecedented monetary stimulus.”

“We’ve never seen demand like this before for our products,” she added.