Grayscale’s BTC Trust Benefits from Inflows

Grayscale BTC

The BTC-related products developed by Grayscale had been one of the main engines driving institutional money into the largest cryptocurrency in 2020. The XRP token had been the most severely-hit cryptocurrency in the top 10, but Bitcoin continued to shine during the 4th quarter of last year, according to the latest figures released by Grayscale. We can’t anticipate when the current crypto market enthusiasm will end, but the numbers are telling us that “smart money” had been pilling into Bitcoin last year at a record pace.

Smart money view BTC as an inflationary hedge?

Based on statistics released by Grayscale yesterday, the total investments into the company’s family of products amounted to $3.3 billion only during the last quarter of 2020. That equals a 300% increase as compared to the 3rd quarter when the figures were estimated at $1.05 billion.

When it comes to the Grayscale Bitcoin trust, not less than $217 million in average weekly inflows had been generated, 8 times more than the Ethereum trust. What’s even more interesting is that over 90% of the flow came from institutional names, confirming that behind the massive Bitcoin rally there were not just retail buyers.

It is easy to conclude that based on the data released by the company, “smart money” investors viewed Bitcoin as an inflationary hedge. Even though in the US inflation had not yet picked up steam, it is expected to reach 2% before the end of 2021, since the monthly rise is currently 0.4%.

New US stimulus impact on Bitcoin

Massive stimulus in the US had been putting pressure on the dollar and in return assets as Bitcoin thrived. Many new events are expected to occur in the crypto market, including the launching of ETH futures in February. However, in the short-term, the focus will be on the new stimulus proposed by the new President Joe Biden.

More details had been provided less than a day ago and the total amount of spending goal is $1.9 trillion. Still, it will need to be approved by Congress first, where a majority of 60% should vote on it. Democrats will very likely be forced to make concessions, driving the figure down. Financial markets had a rather muted reaction, communicating there were much higher expectations.

Looking ahead, we need to see if Bitcoin continues to break to new highs. If it does, the rally will continue until $45k or $50k. Resistance around the current all-time highs will mean sellers managed to balance the order flow and the corrective stance will remain in play.

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