Analysts expected institutional investors to drive into cryptocurrencies this year, and that has been the case so far.
Grayscale reported in May that hedge funds went on a bitcoin buying spree. In the first quarter of 2019, hedge fund inflows into Grayscale’s products shot up to $24 million as compared to just $1 million in Q4 2018. The firm also added that 56% of its total investments during the quarter were driven by hedge fund inflows, leading to a 42% quarter-over-quarter jump in the firm’s total inflows.
Grayscale’s publicly-quoted Bitcoin Investment Trust (GBTC) seems to be the biggest beneficiary of the hedge fund inflows. The product accounted for nearly $2.85 billion of the firm’s total assets under management according to the latest report.
That’s not surprising as GBTC is expected to soar in light of bitcoin’s latest price rally, according to Fundstrat co-founder Thomas Lee. So hedge funds seem to be driving into the investment vehicle so that they don’t miss out on the massive gains that bitcoin can potentially deliver.
Grayscale’s AUM stood at $1.3 billion at the beginning of May. GBTC alone accounted for nearly $1.2 billion of the total corpus.