Crypto Funds Are Seeing Massive Inflows Of Institutional Money: Why?

The first quarter of 2020 has been a dramatic one in the cryptocurrency news and market updates. For Grayscale Investment Products which is one of the biggest crypto funds, it was a quarter full of new capital, suggesting that institutional traders are slowly increasing their exposure to digital assets at a rapid rate. According to the data we can see, the vast majority of crypto funds are seeing massive influx of institutional money – but what does this mean?

Well, the data shows that in addition to the past few months which were highly positive for the fundamental growth of the investor composition in the market, they also come close on the heels of a positive 2019.

Will 2020 bring in more profits?

According to the quarterly report by Grayscale Investments which was released yesterday, fiat inflows into the various crypto investment trusts totalled over $500 million in Q1 of 2020 alone. Crypto funds are seeing massive inflows of institutional money and the magnitude of this number if elucidated by the fact that inflows into their products throughout 2019 totalled a sum north of $1 billion.

This signaled that the macro landscape in 2020 has made Bitcoin and other assets more attractive to investors. One journalist at the blockchain news magazine The Block summarized the key takeaways from the report in a recent tweet and referenced a chart from Grayscale showing how massive this recent inflow actually was – compared to the one seen in the past.

“Grayscale’s quarterly report has just hit the wire: – Inflows into its various cryptocurrency funds soared to an all-time high of $503.7 million. – More than $1 billion was raised in last 12 months. – 88% of investors were institutions,” the analyst wrote.

Grayscale's quarterly report has just hit the wire:

– Inflows into its various cryptocurrency funds soared to an all-time high of $503.7 million.
-More than $1 billion was raised in last 12 months.
– 88% of investors were institutions pic.twitter.com/3sMMvk6OJ6

— Frank Chaparro (@fintechfrank) April 16, 2020

So, following the Q1 of 2020, the total cumulative interest across Grayscale and its swatch of investment products reached $1.6 billion. There are two main factors now which possibly played into the massive increase – and ones which indicate why crypto funds are showing massive influxes of institutional money.

The first factor is the bullish price action seen throughout the first few months in 2020. The second, is the fear regarding the turbulence seen in the global economy, with these investors turning to “hard assets” like crypto in an effort to hedge their portfolios.