Grayscale
Crypto Giant Grayscale Adds Solana and Uniswap to Digital Large Cap Fund Amid Quarterly Rebalance
Digital asset giant Grayscale is adding smart contract platform Solana (SOL) and decentralized exchange Uniswap (UNI) to one of its crypto investment products. In a new press release, Grayscale says it added SOL and UNI to its Digital Large Cap Fund amid a quarterly rebalancing of crypto assets. The crypto asset manager, which is the […]
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Grayscale adds SOL and UNI to Digital Large Cap Fund portfolio
Grayscale's GDLC Fund now includes Solana and Uniswap at 3.24% and 1.06% respectively after reducing LTC and BCH holdings.
Grayscale Investments, a New-York based crypto asset manager, includes Solana (SOL) and Uniswap (UNI) after rebalancing its basket of Grayscale Digital Large Cap Fund (GDLC) portfolio.
The quarterly rebalancing of GDLC is done by selling existing components of the portfolio for cash and procuring performant crypto assets. Based on the adjustment, Solana and Uniswap make 3.24% and 1.06% of the Fund components respectively while Grayscale continues to cut down on Litecoin (LTC) and Bitcoin Cash (BCH) holdings.
In the previous quarterly rebalancing, Grayscale’s portfolio had included 4.26% of Cardano's ADA, making it the third-largest asset in the Large Cap Fund. However, the latest adjustment makes ADA represent 5.11% of the fund.
Bitcoin (BTC) and Ethereum (ETH) continue to own a lion’s share of the GDLC crypto basket, at 62.19% and 26.08% respectively. Chanlink (LINK), Bitcoin Cash and Litecoin together represent 2.32% of the GDLC basket, which is down from 2.88% in July 2021.
Grayscale has not made quarterly adjustments to its DeFi Fund, which is currently dominated by Uniswap at 45.20% and Aave (AAVE) at 14.11%.
Related: Morgan Stanley doubles exposure to Bitcoin through Grayscale shares
Grayscale's products continue to gain mainstream attention as financial giants such as Morgan Stanley more than doubled their investment on Grayscale’s single asset offering, Bitcoin Trust.
According to a Cointelegraph report, Morgan Stanley invested in a total of 58,116 shares of the Grayscale Bitcoin Trust as of July 2021 via its Europe Opportunity Fund, indicating a 105% increase in shares since April.
The firm’s move toward aggressive crypto investments follows a recent announcement from March 2021 that aimed at providing investors with exposure to Bitcoin.
Morgan Stanley doubles exposure to Bitcoin through Grayscale shares
The investment firm has increased its shares of GBTC by more than 105% since April.
Major U.S. investment bank Morgan Stanley has more than doubled its shares of Grayscale Bitcoin Trust since April.
According to a report from the U.S. Securities and Exchange Commission, or SEC, filed Sept. 27, the Morgan Stanley Europe Opportunity Fund, which invests in established and emerging companies throughout Europe, owned 58,116 shares of the Grayscale Bitcoin Trust, or GBTC, as of July 31. At the time of publication, the price of GBTC is $34.28, making the investment bank’s exposure to Bitcoin (BTC) roughly $2 million — Morgan Stanley reported the shares cost $2.4 million.
Previous filings show that Morgan Stanley has increased its shares of GBTC by more than 105% since April. Cointelegraph reported in June that the investment bank held 28,298 GBTC, worth roughly $1.3 million at the time.
Morgan Stanley has been gaining more exposure to BTC in 2021. The firm’s Europe Opportunity Fund aims at maximum capital appreciation by investing in “high quality established and emerging” Europe-based companies that the team considers “undervalued at the time of purchase."
In April, the investment bank announced it would be adding Bitcoin exposure to 12 investment funds through Grayscale and cash-settled futures. The bank later led a $48 million funding round for Securitize, a Coinbase-backed tokenization platform — the action represented Morgan Stanley’s first capital investment foray into blockchain.
Related: Morgan Stanley exec says Bitcoin is the ‘Kenny from South Park’ of money
Ark Invest under CEO Cathie Wood also has a significant investment in the Grayscale Bitcoin Trust. In July, the firm reported it had purchased more than 450,000 GBTC shares in two separate buys. At the time of publication, Ark Invest and its institutional funds hold more than 8.3 million GBTC shares, bringing its combined holdings to roughly 0.69% of its portfolio.
Institutional investors increase their crypto holdings for 5th straight week
Despite the recent selloff in the crypto markets, institutional managers have been quietly turning bullish over the past month.
Cryptocurrency assets held by institutional managers rose for a fifth consecutive week, a sign that market participants had once again flipped bullish on Bitcoin (BTC) and the leading altcoins.
Investment flows into crypto products totaled $42 million in the week ending on Sept. 19, with Bitcoin funds seeing inflows of $15 million, according to digital asset manager CoinShares. That’s only the third time in 16 weeks that BTC investment products saw positive inflows.
All major assets registered a weekly increase, with investors buying up $6.6 million worth of Ether (ETH) products and $3.7 million worth of multi-asset funds. Investors also allocated $4.8 million towards Solana (SOL), disregarding a denial-of-service disruption earlier this week as a result of network congestion.
In terms of actual products, 21Shares registered the largest weekly inflows at $28 million. The physically-backed crypto exchange-traded product provider now has $1.87 billion in assets under management. Grayscale remains the single largest crypto asset manager, with $43.177 billion in total assets.
Fund managers have been buying up crypto in lockstep with a broad market recovery that began in late July. Crypto markets peaked above $2.2 trillion last week after plunging to around half that amount earlier in mid-July. However, by Monday, all major crypto assets had printed heavy losses as Chinese Evergrande news walloped risk sentiment.
Related: Bitcoin bounce levels extend to $36K with bulls unmoved by 8% BTC price dip
Institutional investors have become important players in the cryptocurrency market, which is a testament to the growing mainstream acceptance of digital assets. Some of crypto’s biggest asset managers told Cointelegraph earlier this year that investing in digital assets no longer carries the same level of career risk as before, which means more financial advisers and wealth managers are likely to enter the market. This was corroborated by a recent poll by London-based crypto fund Nickel Digital Asset Management, which found that most hedge fund executives have already purchased cryptocurrency.
Institutional traders flock to Solana as demand for ETH and BTC flattens
Institutions were betting big on Solana investment products last week, with SOL-tracking products attracting 86.6% of institutional inflows to digital asset products last week.
Institutional traders have flocked to Solana (SOL) as demand for Ether (ETH) and Bitcoin (BTC) exposure has flattened, with SOL investment products representing a whopping 86.6% of total weekly inflows crypto investment products last week.
According to the Sept. 14 issue of CoinShares’ Digital Asset Fund Flows Weekly, Solana (SOL) investment products saw inflows of $49.4 million between Sept. 6 and Sept.10. The combined total inflows for crypto investment products equated to $57 million for the week, with SOL seeing a 275% week-over-week increase to represent 86.6% of total inflow.
The surging inflows to Solana products coincided with the price of SOL gaining 36% over the same period. The report concluded:
“A combination of price appreciation and inflows now brings Solana’s assets under management to $97 million, the 5th largest of all investment products.”
Digital asset products have now seen inflows for the fourth consecutive week, with demand for altcoins significantly outweighing the appetite for BTC products which saw minimal inflows of $200,000.
The inflows were also partially offset by institutional investors offloading $6.3 million worth Ether exposure as the underlying asset’s price dropped 10% during the week.
Despite Cardano (ADA)’s highly anticipated introduction of smart contracts on Sept. 13, institutional flows ADA-tracking products saw a 46% decrease in inflows compared to the previous week.
Multi-asset products, Ripple (XRP), Polkadot (DOT) and Bitcoin Cash (BCH) also saw inflows of $3.2 million, $3.1 million, $1.7 million and $600,000 respectively.
Related: Finance Redefined: DeFi’s $4M lobsters and Solana gaming, Sept. 6–10
According to CoinShares estimates, institutional asset managers currently represent a total AUM of $56.3 billion combined — marking a decrease of 9% compared to the week before as the broader crypto markets experienced a pullback across the board.
Flows were mixed between asset managers, with CoinShares XBT and Purpose funds shedding $24.7 million and $45.5 million respectively while 21Shares, ETC Group and CoinShares saw inflows of $75 million, $13 million and $6.1 million respectively.
Top Institutional manager Grayscale remained dominant, representing 74% of sectors AUM with $41.8 billion.
Grayscale announced a partnership with alternative asset fintech provider iCapital Network on Sept. 13. The deal will enable iCapital's advisors to offer the firm’s high-net-worth clients access to Grayscales’ digital asset services via a diversified market-cap-weighted investment strategy.
Grayscale and Icapital Partner to Provide 6,700 Advisors Access to Crypto Investments
Grayscale Investments has partnered with Icapital Network to provide more than 6,700 advisors access to its cryptocurrency investment products. “Advisors and their clients have expressed increasing appetite for uncorrelated return potential in their portfolios, and digital currencies are at the center of the conversation right now,” said the CEO of Icapital. Over 6,700 Advisors Now […]Three More Grayscale Crypto Trusts Have Been Designated SEC-Reporting Companies
Institutional exposure to altcoin products retests all-time high
Inflows to Solana-based investment products saw a whopping 388% increase last week, with institutional investors gaining exposure to $13.2 million worth of SOL products.
Institutional demand for altcoin exposure has surged to record levels, with the altcoin market share now representing a record 35% of capital locked in crypto investment products.
According to CoinShares’ Sept. 7 Digital Asset Fund Flows Weekly report, nearly 40% of the past week's inflows to digital asset investment products were allocated t instruments tracking altcoins.
While $97.8 million was invested into crypto investment products combined between Aug. 30 and Sept. 3 to mark the sector’s third consecutive week of inflows, $38.9 million was invested into altcoin products.
This past week also saw a sizeable increase in institutional crypto investments, with the previous two weeks recording inflows of $24 million and $21 million respectively.
Roughly 35% of capital invested in institutional crypto investment products is currently locked in instruments tracking assets other than Bitcoin — comprising a retest of the metric’s all-time high from May.
Ethereum (ETH) tracking products led the altcoin pack for the second week in a row, recording inflows of $14.4 million, a 16.2% decrease from the previous week’s $17.2 million.
There was a whopping 388% spike in weekly inflows for Solana (SOL)-based products, with SOL products absorbing $13.2 million. This coincided with the price of SOL gaining 37% over the same period.
CoinShares highlighted that inflows to Solana products doubled year-to-date (YTD) this past week, with $25 million having been invested into SOL instruments during the entirety of 2021 so far. SOL-based products now represent $44 million in total assets under management (AUM).
Cardano (ADA) and Polkadot (DOT)-based funds also saw notable inflows of $6.5 million and $2.7 million respectively.
Bitcoin (BTC) investment products bucked an eight-week trend of outflows — the longest streak on record for any digital asset product — after enjoying inflows of $58.9 million for the week. Despite the bullish shift in momentum, BTC investment products have posted outflows for 14 of the past 17 weeks.
Related: The total market cap of public crypto stocks has quadrupled since January
According to CoinShares estimates, institutional asset managers currently represent a total AUM of $62.5 billion combined — nearing the record high of $66 billion posted during mid-May.
Top institutional asset manager Grayscale continues to dominate the competition, representing 73% of the sector's combined AUM with $46.2 billion.
3 reasons why a Bitcoin ETF approval will be a game changer for BTC price
A Bitcoin ETF approval will open the door for more conservative investors and this could have an irreversible impact on BTC price.
Some financial experts believe that the price of cryptocurrencies is solely driven by investors' speculation, and in the past few years detractors have suggested that fixed income instruments like treasury bills have no relation to do with digital assets. This point of view is fairly accurate because, at this time, most investors from the asset class are not allowed to invest in Bitcoin (BTC) and altcoins.
Public pension funds, retirement plans, fixed income and most non-leverage equity and multimarket mutual funds can only invest in certain asset classes. These limits arise from the fund class regulation, the fund's own bylaws, and the administrator's risk assessment.
Not every fund can invest in Grayscale's GBTC Trust
Unbeknownst to most, the mutual fund manager does not have absolute control of the investment decision. The fund administrator is a third-party company that acts as an intermediary between the fund manager and investors to verify and distribute assets tied to investments.
Therefore, the fund administrator might rule that a particular instrument poses a significant risk and either limit the exposure or deny access to it. The trust fund, in this example, is the investment vehicle used by the Grayscale Bitcoin (GBTC), and it involves an issuer credit risk.
Global asset managers will typically have a 30% to 60% fixed income exposure, so it is very unlikely to have any exposure to cryptocurrencies. Amundi, the leading European investment firm with over $2.1 trillion of assets under management, is a good example.
According to BCG Group, the global asset industry has surpassed $100 trillion, with North America holding nearly 50% of this figure. Unfortunately, these astronomical figures cause analysts to incorrectly relate those numbers to the Bitcoin ETF instrument.
#Grayscale has partnered BNY Mellon, the world's largest custodian bank with $41 Trillion in assets in custody. In Feb 2021, #BNYMellon announced they were entering the #Crypto space. Big move by Grayscale in the battle for a #Bitcoin ETF.@Grayscale @BNYMellon #etf #bitcoinetf pic.twitter.com/RfSO7UOKGS
— Thinking Crypto - YouTube Channel & Podcast (@ThinkingCrypto1) July 13, 2021
According to Reuters, more than half of all investment-grade corporate bonds in the eurozone now trade with negative yields. This includes $7.7 trillion worth of government debt and accounts for 70.8% of the total.
Financial Times has reported that the value of the global negative-yield debt has surpassed $16.5 trillion, fueled by investors' more pessimistic outlook and bond purchases by central banks.
Investors will gradually exit fixed income strategies
There's reason to believe that investors getting negative yields will eventually move to riskier assets, although it is improbable that a total shift to cryptocurrencies will occur. However, the most likely beneficiaries are non-leverage multi-assets and alternative investments as these instruments usually carry lower risk than equities and high-yield structured assets and bonds.
Consequently, an eventual Bitcoin ETF approval by the U.S. Securities and Exchange Commission (SEC) will open the doors for a vast array of funds that are currently shut out from cryptocurrency exposure.
Even if the ETF is exclusively reserved for a part of the equities and multi-asset classes, the new instrument doesn't need to capture $500 billion to propel Bitcoin's market capitalization above $2 trillion. Less than 2.5 million coins are deposited on exchanges, equivalent to $125 billion readily available for trading.
Commodity funds are the best candidate
According to iShares, the value of global commodities exchange-traded products adds up to $263 billion. Considering not every mutual fund is listed, it is reasonable to assume that the actual number surpasses $500 billion.
This means that a mere 1% allocation from this specific asset class is equal to $5 billion, and such an investment would surely be enough to propel the Bitcoin price above its $65,000 all-time high.
If and when a BTC ETF is approved, traders will front-run the potential inflow as soon as the approval is announced, regardless of whether the products capture only $5 billion in the first couple of months.
As long as governments and central banks continue injecting liquidity, buying bonds and issuing stimulus packages, there will be a gradual inflow to riskier assets, increasing the demand for the ETF.
The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should conduct your own research when making a decision.