Monday 19 October 2020 2:30 pm

Crypto Asset Manager sees record $1 billion inflows as institutions bet on BTC

This week CryptoCompare data shows the price of Bitcoin (BTC) moved up from around $11,250 to an $11,650 high, before it moved back down to retest $11,200. Since then the cryptocurrency’s price went up to trade at $11,500.

Ether (ETH), the second-largest cryptocurrency by market capitalization, moved from $360 at the start of the week to a $390 high, before its price dropped back down. At press time it’s trading at $376.

Cryptocurrency asset manager Grayscale Investments released its financial report for the third quarter of the year this week. The document revealed that it raised $1.05 billion  from investors, making it the “largest capital inflow in a single quarter in the firm’s history.”

The report details that Grayscale’s bitcoin product, GBTC, led investment demand with inflows of $719.3 million in Q3 2020. The trust’s assets under management grew 147% year-to-date. So far this year, the firm has seen investors put over $2.4 billion into its family of products, equivalent to “more than double the $1.2 billion cumulative inflow into the products from 2013-2019.”

According to Grayscale’s report, institutional investors accounted for 81% of the investment in Q3, and investors broadened their exposure to cryptoassets during the quarter, as 57%  of the funds came from investors with exposure to various Grayscale products. Its assets under management are now $6.4 billion.

Stone Ridge Holdings Group, a $10 billion asset manager, announced this week bitcoin would serve as its primary treasury reserve asset. The firm bought over 10,000 bitcoin,m at press time worth over $110 million, as “part of its treasury research strategy.” The move came after an announcement from MicroStrategy revealing the firm invested $425 million into bitcoin, purchasing 38,250 BTC.

MicroStrategy’s investment did not end there, however.r The firm owns a number of premium domains, including Courage.com, Glory.com, and Strategy.com. It redirected one of these. Hope.com, to a page dedicated to giving users educational resources on BTC.

Square, the payments firm founded by Twitter co-founder Jack Dorsey, also bought $50 million worth of BTC earlier this month. The move was touted as a “strong vote of confidence for the future of bitcoin” and a signal that the payments company sees “a lot of potential” in BTC as an asset by JPMorgan analysts.

While institutions are seemingly increasingly betting on bitcoin, early adopters are moving their funds under the hood. Data from the Bitcoin blockchain shows that so far this year over 2,000 bitcoins from the so-called “Satoshi era” were moved.

The term “Satoshi era” refers to the period in which Bitcoin’s pseudonymous creator, Satoshi Nakamoto, was still active in the community. Satoshi left the crypto space in December 2010. Most of the movements simply included wallet changes, although 9.99 BTC ($114,500) were donated to the Free Software Foundation (FSF), while another 9.,99 went to the  American Institute for Economic Research (AIER).

Cryptocurrency exchanges’ reserves were also in the spotlight this week. San Francisco-based Coinbase is estimated to have over $11 billion worth of the cryptocurrency in its wallets, making it a risk for the market in case the funds ever end up in the wrong hands. OKEx, which has $2.2 billion worth of BTC, froze withdrawals as one of its private key holders is “out of touch” with the exchange while cooperating with authorities in an investigation.

Hackers Face Pushback in Crypto

Belgium’s financial watchdog Financial Services and Markets Authority (FSMA) estimated Belgian investors lost 10 million euros ($11.8 million) between May 2019 and September 2020. In a report, the FSMA attributed the losses to fraudulent platforms including cryptocurrencies.

A separate report indicated that hackers have stolen over $22 million worth of bitcoin from Electrum wallet users by pushing fake updates via pop-up messages to those running old versions of the cryptocurrency wallet.

While hackers have been running rampant in the cryptocurrency space so far, some companies are starting to push back. This week crypto exchange Binance revealed it helped at least one investor recover $30,000 from a cryptocurrency scam.

The exchange froze stolen funds deposited onto its platform, and sent them back to their rightful owners. The exchange called on others in the space to help stop bad actors.

Crypto AM: Market View in association with Ziglu

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