According to CEO Michael Sonnenshein, pension funds are providing a significant boost to the growth of Grayscale’s investment products
Grayscale’s new CEO Michael Sonnenshein told Bloomberg that pension funds and financial endowments are actively investing in his company’s products:
„We have started to see active participation not only from hedge funds, which have been there for some time, but also from other institutions, pensions and insurance companies. […] The size of their allocations is also growing rapidly.“
Grayscale has long been at the forefront of large mainstream players that have decided to purchase significant amounts of Bitcoin (BTC), so much so that it currently holds about 3% of all BTC in circulation. The company continues to accumulate large positions in the digital asset as more and more institutional investors seek exposure to Bitcoin.
Its total Assets Under Management (AUM) exceeded $27 billion across 10 different products.
The Grayscale Crypto Engine remains by far the most popular product, with over $23 billion in AUM. Grayscale’s Ethereum Trust is currently valued at about $3.6 billion, while its Digital Large Cap Fund holds nearly $339 million.
Total AUM: $27.4 billion
Pension funds are also following the trend of many institutional buyers entering the Bitcoin market in 2020. A survey conducted by Fidelity Investments last year revealed that 36% of financial institutions in the U.S. and Europe own cryptocurrencies or derivatives. More than a quarter of respondents said they owned Bitcoin, while 11% said they held Ether (ETH).
According to Grayscale, the influx of institutional capital into crypto and Bitcoin is intensifying, with pension funds the financial endowments being the latest entrants to the market.
Grayscale’s aggressive BTC buying policy is likely contributing to the rapid appreciation of the leading cryptocurrency. As more and more Bitcoin is purchased, the asset, already characterized by inherent scarcity, is becoming even harder to come by. Sonnenshein explained:
This is an asset whose scarcity is verifiable: when there are market mechanisms in place that take it out of circulation, that inherently makes it an even scarcer asset.