In a recent interview with CNBC, Michael Sonnenshein, managing director of crypto investment firm Grayscale, revealed that business has been good despite the bear market that’s drained almost $600 billion from the market cap. Not only that, most of their in-flowing money is institutional.
With today’s release of Grayscale’s Q3 report, Sonnenshein says,
“$330 million cumulatively has come into the Grayscale family of products through the end of September, and about 70% of that is coming from institutions in just Q3 alone.”
#Bitcoin is celebrating its 10th anniversary this week. Michael @Sonnenshein, managing director of Grayscale Investments, weighs in on where the cryptocurrency is headed next. pic.twitter.com/e9M0hbT7ak
— CNBC's Fast Money (@CNBCFastMoney) November 1, 2018
According to Sonnenshein, many of his clients are not new to the investment game but have “10+ year-track records of success” and “deep investment committees and deep convictions, and they’re investing into the space for the medium to long term.”
Grayscale added $81.1 million in Q3 alone, with a weekly average of $4.5 million invested into their Bitcoin product.
BREAKING: We are excited to share our Q3 Digital Asset Investment Report!
YTD Highlights include:
• Capital Raised into Grayscale Products: $329.5M (?? 33% in Q3)
• Majority of investment (59%) is from institutional investors
Read the FULL report ?? https://t.co/yuedrhFzY9 pic.twitter.com/CMvWvbI7Tl
— Grayscale (@GrayscaleInvest) November 1, 2018
According to the report, “This marks the strongest year-to-date inflows through September that we’ve experienced during any calendar year since the inception of our business.”
The report notes that this may mark a trend reversal as their Bitcoin Investment Trust and XRP Investment Trust have produced the first positive quarterly returns for any Grayscale products in 2018. However, Ethereum took the biggest slide at -46%.
Grayscale Q3 2018 Net Total Return (Cumulative %)
+ 12.6% – Bitcoin Investment Trust
-10.8% – Ethereum Classic Investment Trust
-46% – Ethereum Investment Trust
-3.3% – Digital Large Cap Fund
-17.4% – Bitcoin Cash Investment Trust
+21.3% – XRP Investment Trust
-16.4% – Litecoin Investment Trust
-27.7% – Zen Investment Trust
Source: Grayscale Digital Asset Investment Report Q3 2018
“I think all of the institutions that we’re dealing with are really using this price pullback as a time to either average down if they’re already in the asset class or using this price decline as a time to really start building a position.”
He explains that while some investors were involved before the 2017 bull run, there are new investors who were excited by the run-up and “are now stepping into the space now that prices are a bit more attractive.”
When asked why their investors are so attracted to Bitcoin over other cryptocurrencies, Sonnenshein explains,
“Bitcoin is really just the asset of the digital currencies that we’re offering products around where investors have the greatest familiarity, the greatest knowledge, and it actually often is where they first deploy capital and then come back into other products.”
Other institutional investors who have recently entered the cryptocurrency market include Wall Street legend Ric Edelman and Yale investment guru David Swensen.
Grayscale now has $1.5 billion total assets under management.