Institutional Investors Drive Grayscale's Cryptocurrency Q3 Inflows Above $1B

Grayscale Investments on Wednesday reported it received $1.05 billion in cryptocurrency investment products in the third quarter. 

What Happened: The New York-based investment firm, in its "Digital Asset Investment" report, said that it saw the largest single-quarter capital inflow in Q3. Its year-to-date investments have topped $2.4 billion — double the cumulative flow of $1.2 billion in the 2013-2019 period.

The company’s Grayscale Bitcoin Trust GBTC led investment demand, garnering inflows of $719.3 million in the period with assets under management growing 147% year-to-date. 

Demand also grew for other products — Grayscale Bitcoin Cash Trust BCHG, Grayscale Litecoin Trust LTCN, and Grayscale Digital Large Cap Fund GDLC saw inflows rise by more than 1,400% quarter-over-quarter.

Grayscale Ethereum Trust ETHE drew 17% of inflows from new institutional investors.

As much as 81% of the investments in the firm’s products came from institutional investors in the period.

Why It Matters: On Monday, Grayscale said its Ethereum trust now operated as a U.S. Securities and Exchange Commission reporting company.

The company’s Bitcoin Cash and Litecoin funds got approval for listing on the OTC markets by the Financial Industry Regulatory Authority in July.

JPMorgan analysts said Tuesday that Square Inc’s SQ $50 million investment in Bitcoin signifies the cryptocurrency’s potential as an asset. The analysts also pointed to the $425 million Bitcoin purchase of MicroStrategy Incorporated MSTR as an indicator of demand for Bitcoin outstripping its supply in the third quarter.

Price Action: Bitcoin traded 0.58% lower at $11,390.44 at press time, while Ethereum traded 1.6% lower at $377.32.