Published: February 12th, 2021
Cryptocurrency funds posted a record-setting week at the end of January. In its weekly report on crypto investment funds, asset management firm Coinshares said inflows across all funds tracked by the report touched USD 1.3 billion — a new one-week high.
The report looks at major firms like 3iQ, Grayscale, 21Shares, and others; and how much money they're pouring into crypto funds. With over USD 25 billion in assets under management, Grayscale has the lead in terms of crypto investment products. The Grayscale Bitcoin Trust (GBTC) accounts for about USD 21.5 billion of that. As an investment vehicle, the trust provides investors with Bitcoin exposure but without the complications of trading and custody.
The company attributed last week’s record inflows to the Bitcoin bull run of the past few months. BTC’s performance drove 97% of the USD 1.3 billion into Bitcoin-based investment vehicles. As impressive as the number is, Coinshares analysts also pointed out that investment-grade funds and other products are likely just the tip of the iceberg when it comes to assessing total Bitcoin trading volume.
‘Investment products still haven’t tested the underlying liquidity of Bitcoin, despite the record inflows,’ Coinshares’ report states. As a percentage of total Bitcoin trading turnover, investment products represent just 6.5 per cent. Overall Bitcoin trading volumes have been much higher in recent weeks, at USD 12.2 billion a day on average. That compares to USD 2.2 billion last year.’
Price is part of the picture, they say. After reaching a new record high above USD 41,000 earlier in February, BTC’s price stabilised at around USD 33,000 — before shooting up again this week. In 2020 at this time, a single Bitcoin could be purchased for around USD 8,000. Big investors continue to swoop in
Crypto investment news over the last few months has been dominated by reports of institutional investors taking up significant Bitcoin (BTC) positions, with each new investment prompting smaller investors to pile in. The arrival of big finance into the crypto space has driven what can safely be called the biggest crypto bull run since 2017.
Collectively a core group of large firms has scooped up hundreds of millions USD worth of BTC, alongside skyrocketing retail interest. Tesla's recent announcement of a USD 1.5 billion Bitcoin position kicked the price of BTC to a new record high.
As Bitcoin continues on its skyward trajectory, here are five of the biggest corporate crypto hoarders that have emerged in the last few months. These companies are either holding cryptocurrencies in funds on behalf of investors or owning them as reserve assets.
Elon Musk’s electric vehicle brand has joined the ranks of large companies with notable Bitcoin investments. At the beginning of February, an SEC filing showed that the company had poured USD 1.50 billion into BTC. That amounts to about 7.6 per cent of the company’s estimated USD 19.3 billion in cash holdings.
The SEC filing says Tesla's Bitcoin buy is part of a revised investment policy focused on maximising returns while also diversifying its stores of cash on hand. The document goes on to say that Tesla may invest some of its money in ‘alternative reserve assets,’ which include provision for digital assets alongside gold and bullion-based assets.
The company also indicated that it plans to start accepting Bitcoin as payment for its cars ‘in the near future.’
Business analytics platform MicroStrategy started a BTC buying spree which has seen the company make Bitcoin its primary reserve asset.
The firm makes mobile software and provides cloud-based business intelligence services. Earlier in February, it continued its 2020 move into Bitcoin by purchasing 295 BTC. That gave it a total volume of 71,080 BTC in its reserve holdings, currently valued at over USD 3 billion. At one stage the company’s CEO said he was buying USD 1,000 in Bitcoin every second.
Galaxy Digital Holdings is a crypto-focused merchant bank which now holds 16,400 BTC, according to analysts. At current prices that hoard is worth above USD 770 million.
Founded in January 2018, Galaxy has previously partnered with other crypto firms like BlockFi and Block.one. Company leadership has been open and vocal in its Bitcoin advocacy. Last year the bank told Bloomberg that pandemic-related stimulus measures were stoking wider investor interest in cryptocurrencies and that Bitcoin had reached its moment of ‘arrival.’
One of the biggest names in the Bitcoin market, institutional investment platform Grayscale boasts the biggest Bitcoin portfolio of any traditional finance firm, with more than USD 30 billion in BTC under management. The firm's primary crypto vehicle for investors is the Grayscale Bitcoin Trust (GBTC).
Grayscale currently holds 3 per cent of the world’s total Bitcoin supply and manages more than 656,165 BTC across its Grayscale Digital Large Cap Fund and the Grayscale Bitcoin Trust.
An early pioneer in digital asset investment products, Coinshares (the author of the report noted above) also makes the list of big companies holding or managing significant Bitcoin assets.
The firm is widely regarded across the cryptocurrency investment industry as an innovator. It was first to launch an exchange-traded Bitcoin product, and first to establish a regulated Bitcoin hedge fund. Currently, the company offers investors two exchange-traded Bitcoin products, Bitcoin Tracker Euro and Bitcoin Tracker One.
Earlier this month, the firm’s digital assets under management included 69,729 BTC valued at over USD 3.1 billion. While not as big as Grayscale's BTC vault, CoinShares' position still accounts for over 0.3 per cent of BTC’s circulating supply.
In a recent press release, the company said investors once considered it risky to allocate to Bitcoin. ‘That’s all changed.’