BitcoinBusiness

Grayscale Records $300M Inflow in a Single Day

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Over the course of 24 hours, asset management firm Grayscale's net assets under management (AUM) recorded a rapid inflow of $300 million.

On October 21st, Grayscale reported its net AUM hit $7 billion, with the Grayscale Bitcoin Trust (GBTC) representing 82.84% of it. A day later on October 22nd, the firm said that number had increased to $7.3 billion, after GBTC surpassed $6 billion in AUM.

Grayscale Bitcoin Trust leads the firm's AUM $300 million rise. Source: Grayscale

Data published by Grayscale on Thursday shows that the firm's Bitcoin Trust led the surge: around $234 million of the $300 million in new inflows went into Bitcoin.

Bitcoin Demand Rises as Gold Stagnates

Throughout October, as the BTC Times extensively reported, Grayscale has seen a consistent increase in new inflows, particularly into Bitcoin.

The Grayscale Bitcoin Trust remains the primary alternative to an exchange-traded fund (ETF) in the U.S. Structurally, GBTC acts as an exchange-traded product (ETP), which allows institutions to gain exposure to Bitcoin through the over-the-counter securities exchange OTC Markets.

In the absence of a Bitcoin ETF, in recent years, GBTC has become the first point of entry for institutions into the Bitcoin market. Hence, GBTC's AUM remain a preferred method of gauging institutional interest in Bitcoin.

Amidst market instability, the dollar’s decline, election uncertainty, and the lack of clarity around the pandemic, rising demand for Bitcoin indicates that the dominant cryptocurrency is increasingly considered an established store of value.

Bitcoin as an Ideal Inflation Trade

Prominent investors such as billionaire Wall Street investor Paul Tudor Jones and Real Vision Group CEO Raoul Pal have pinpointed Bitcoin as the best inflation trade.

Following the Federal Reserve’s implementation of a vaguely described average 2% inflation rate, which allows the Fed more freedom to adjust the U.S. dollar's inflation rate, the concerns around currency debasement in the U.S have intensified.

Speaking to CNBC, Tudor Jones said he recommends Bitcoin as the ideal inflation trade over other traditional safe-haven assets, like gold and copper. He said:

“The reason I recommended bitcoin is because it was one of the menu of inflation trades, like gold, like TIPS breakevens, like copper, like being long yield curve and I came to the conclusion that bitcoin was going to be the best inflation trade.”

Grayscale CEO Barry Silbert commented on Twitter that even he purchased bitcoin after watching Tudor Jones' interview with CNBC’s Andrew Sorkin

Atop Grayscale's growing net AUM, other institution-tailored platforms, including the CME Bitcoin futures market, have seen a noticeable spike in trading activity. The Bitcoin options market has also reached an all-time high open interest, according to Skew.

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Joseph Young is a financial analyst based in South Korea. He has covered Bitcoin and the crypto market since 2013. He regularly contributes to the BTC Times, Forbes, and Cointelegraph.