Crypto Week in Review: Grayscale Sees Record Inflows Amid the Coronavirus Pandemic
Volatility has returned to the crypto markets, with Bitcoin (BTC) briefly dropping below $6,500 Wednesday.
BTC rebounded back above $7,000 on Thursday but, Ethereum (ETH) was the real star this week, gaining roughly 8% over the last seven days. ETH’s run comes after new data revealed that the total value transferred on the Ethereum network now matches that of the Bitcoin network.
Komodo (KMD) +52.8%
Numeraire (NMR) +39.1%
Zcash (ZEC) +35.9%
Zcoin (XZC) +30.9%
as of 11:35 pm (EST) on 4/19/20
The Institutions are Coming
Are institutions turning to crypto as a hedge against tumultuous market conditions? Multi-million dollar asset manager Grayscale’s latest quarterly report presents a compelling case.
In the first quarter of 2020, Grayscale experienced its largest influx of inflows in the firm’s history, raising $503.7 million across its suite of products that offer investors indirect exposure to cryptocurrencies.
The most popular investment was Grayscale’s Bitcoin Trust (GBTC), which brought in $388.9 million, nearly double the previous high of $245.8 million in the third quarter of 2019.
Grayscale’s steady increase in investments during a time where there’s been a flight to cash and a sell-off of “high risk” assets makes the data even more compelling. As shown in the chart below, Grayscale’s AUM has grown substantially over the last year, and GBTC now holds up to 1.7% of the circulating supply of Bitcoin.
The CME also reported an influx of institutional investments in Bitcoin futures this week. Wednesday, open interest rose to $181 million, a 70 percent increase from March $106 million on March 22, according to Coindesk.
With institutional interest in crypto continuing to grow and stimulus checks hitting American’s bank accounts, an influx of retail investments is likely coming next.
After facing intense scrutiny, the Libra Association has updated its whitepaper, moving away from its original plans to create a new global currency.
To appease regulators, Libra says it will offer multiple stable coins backed by single national currencies, instead of a basket of national currencies and stable assets like it initially proposed.
“While our vision has always been for the Libra network to complement fiat currencies, not compete with them, a key concern that was shared was the potential for the multi-currency Libra Coin (≋LBR) to interfere with monetary sovereignty and monetary policy if the network reaches significant scale and a large volume of domestic payments are made in ≋LBR,” wrote the Libra association in its update.
Instead, the new plans include a different kind of a multi-currency digital asset that’s backed by fractions of Libra’s collection of stable coins.
Among its concessions, Libra will also limit unregulated entities from offering Libra’s products on their platforms and abandon its plans of turning Libra into a permissionless blockchain.
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