While the crypto community eagerly awaits the SEC’s decision on a Bitcoin-based exchange-traded fund (ETF), data has emerged that proves significant institutional investment is already flowing into the crypto markets. Grayscale Investments, who manage the Bitcoin Investment Trust (GBTC), released their first ever Digital Asset Report last week, and it suggests that institutional investment entering crypto is less like a trickle and more like a flood. Nearly $250 million has been invested in Grayscale’s crypto products during 2018 alone, the majority of which is accounted for by mainstream institutional investors.
Launched in 2015, the Bitcoin Investment Trust allows investment in BTC but mitigates the hassle and risk involved in actually buying and storing the currency. Grayscale charge an annual 2% fee for management of the product, and shares incur a significant premium over the actual price of Bitcoin. Currently GBTC is in the region of 47% more expensive than BTC itself, though the premium can be up to twice that depending on various factors. Of course there’s little to no competition – GBTC is currently the only exchange-traded instrument which enables investors to gain Bitcoin price exposure without actually owning crypto.
Regardless of the costs, the 2018 figures are impressive, not least in light of the fact that crypto prices have been dropping significantly throughout much of the year. The total $248 million invested in Grayscale’s crypto products amounts to just shy of $10 million every week. Of this, a little over $6 million went into GBTC, with the remainder shared between Grayscale’s seven other crypto products, including the index-based Large Cap Fund and Investment Trusts based on Ethereum Classic and Zcash.
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