Posted 5 months ago | by @devadmin
Grayscale CEO Michael Sonnenshein has stated pension funds are driving Grayscale’s massive growth.
Grayscale’s newly-named CEO Michael Sonnenshein told Bloomberg on Thursday that pension funds and endowments are investing actively into Grayscale’s funds, i.e., GBTC.
“We’ve started to see participation not just from the hedge fund segment, which we’ve long seen participation from, but now it’s recently from other institutions, pensions and endowments […] The sizes of allocations they are making are growing rapidly as well.”
Grayscale has been one of the main companies buying Bitcoin and now holds an estimated 3% of all BTC in circulation. But that’s just scratching the ledger as the fund manager continues to accumulate larger positions in the digital asset to keep up with the demand from institutional investors.
Further, Grayscale’s total assets under management, or AUM, have surpassed $27 billion across its ten different products. The Grayscale Bitcoin Trust remains by far its most popular product, with over $23 billion in AUM at the time of this report, according to a recent update shared by the firm. Grayscale’s Ethereum trust is currently valued at around $3.6 billion, while its Digital Large Cap Fund holds nearly $339 million.
01/07/21 UPDATE: Net Assets Under Management, Holdings per Share, and Market Price per Share for our Investment Products.
— Grayscale (@Grayscale) January 7, 2021
Pension funds are following a stampede of institutional investors who began entering the Bitcoin market in 2020. A survey conducted by Fidelity Investments last year found that 36% of financial institutions across the U.S. and Europe said they own cryptocurrencies or derivatives. Over a quarter of the respondents reported holding Bitcoin, while 11% said they own Ethereum. One of the first big buys from a pension fund was $100 million when Massachusetts Mutual Life Insurance Co. (MassMutual) purchased the amount in Bitcoin, as Bitboy Crypto reported. JPMorgan believes that this purchase will cause an influx of more traditional investors, including pension funds, which will all jump into the cryptocurrency game where they estimate a sum of $600 billion could enter the Bitcoin market.
Fidelity has also bet on a wave of new retail traders entering the Bitcoin and crypto market.
Another report by Fidelity last year indicated that institutional interest could increase Bitcoin’s market capitalization by up to $1.3 trillion by capturing just 10% of investments from the alternative investments and fixed income market valued at $13.4 trillion, Bitboy Crypto reported.
That’s just one single market; the potential redistribution of money could flow into Bitcoin. Fidelity also argues that Bitcoin could capture 1% of the bond market, which is approximately worth $50.3 trillion. If Bitcoin were to capture 1% of the bond market, that would put Bitcoin up another $500 billion in market cap.
The report speculates that fewer bond yields could push asset managers further toward alternative assets like Bitcoin. If Fidelity’s optimistic predictions were to come true, Bitcoin’s total capitalization could increase to as high as $2 trillion dollars in market cap. If that comes to pass, Bitcoin will mint another generation of millionaires.
The institutional influx into cryptocurrency and BTC is strengthening, according to Grayscale Investments, with pension funds and endowments among the more recent participants into the crypto sphere. Especially since Bitcoin continues breaking all-time high after high, recently touching the $42K mark before falling back down to Earth. it seems nothing can stand in the way of the Bitcoin digital gold freight train.
Bitcoin is currently trading at [FIAT: $39,285.59] UP +0.1% in the last 24 hours, according to Coingecko at the time of this report.