Despite an ugly first half of the year for digital currencies, which saw the value of all cryptocurrencies fall by more than $300 billion, investors were still hungry for exposure to the nascent technology, according to one digital asset management firm.
New York-based Grayscale Investments LLC said it raised a total of $248.4 million in the first half of the year, the strongest inflows of any six-month period since the company’s inception in 2013.
“As the investment community knows, over the last six months, the digital asset market experienced one of the largest price drawdowns since the inception of Bitcoin in 2009,” said Grayscale in a July 18 report.
“However, what is more interesting, and somewhat counterintuitive, is that the pace of investment into Grayscale products has accelerated to a level that we have not seen before,” they said.
Of the money raised in the first half of 2018, 56% of it was institutional, bucking the narrative that this investor class remains on the sidelines. “Grayscale is experiencing institutional inflow first hand,” said Michael Sonnenshein, managing director of Grayscale Investments. “No question about it.”
Grayscale Investments
Of the institutional inflow, the average investment was $848,000. Accredited individuals accounted for 20% of the investment, with an average investment just shy of $300,000.
On Tuesday, bitcoin BTCUSD, +1.54% traded back above $7,000, reaching a five-week high, but the world’s biggest digital currency remains down more than 40% year to date. Despite the poor start to the year, many investors and analyst commentary views the selloff as an opportunity.
“There’s a narrative that interest has dwindled,” said Sonnenshein. “We could not disagree more. As prices have come down, investors have come off the sidelines—they have viewed the falling prices as an opportunity.”
These comments mirror Coinbase VP Adam White who said on CNBC’s Fast Money Monday, that conversations with institutional investors “have become more and more profound.”