Grayscale, the creator of GBTC, had an average of $2 million invested every week during the 4th quarter of 2018. About 66% of all investments came from institutions, while 88% of all Grayscale digital investments were in Bitcoin. Just 12% of investments were directed at other digital assets, leading Grayscale to declare the “return of the Bitcoin Maximalist” in their quarterly report.
Investments across the board were down in 2018 as the bear market took over. Yet, Grayscale had its best year so far, with over $359 million in investments. The Bitcoin Investment Trust’s GBTC product has been running for a few years now. With over $359 million in investments, Grayscale had its best year in 2018
Interestingly, the growth was almost 300% over 2017, the year of the largest Bitcoin bull run in history.
The GBTC product is clearly the most attractive to investors. However, the company believes that other digital assets are going to thrive in the future.
Despite a slowdown in investment across products in the fourth quarter, we continue to see evidence that digital assets are here to stay as a new asset class. Moreover, we believe in a future where multiple digital assets survive, thrive, and complement one another in the digital economy, allowing them to play a diversifying role within investor portfolios.
40% of Investments Were Retirement Accounts in Q4
Roughly 40% of the investments in the fourth quarter were from retirement accounts.
GBTC is one of the many products that could be bought by the Blockchain Opportunities Fund. It was recently more than 50% funded by a single county in Virginia. Two retirement funds in Fairfax County were responsible for $21 million of $40 million total invested into Morgan Creek Digital’s fund.
When launched years ago, the value of shares in GBTC was meant to represent the value of 0.1BTC. However, this has changed vastly, as evidenced by the actual value of GBTC on the OTC markets.
GBTC hit an all-time high at the pinnacle of the Bitcoin bull run in 2017. It’s since lost over 75% of its value from that time.
In researching this issue, we found a statement from the Bitcoin Investment Trust:
There can be no assurance that the value of the shares will approximate the value of the Bitcoin held by the Trust and the shares may trade at a substantial premium over or discount to the value of the Trust’s Bitcoin. The Trust may, but will not be required to, seek regulatory approval to operate a redemption program.
GBTC is one way that traditional investors can gain exposure to crypto assets. But an ETF is still in the offing, and when that happens, virtually everyone expects a greatly renewed interest in the crypto markets, which have stagnated some in recent weeks.