$1.5 billion Grayscale reports record inflows, as institutions pour money into the crypto fund manager

Grayscale, the digital asset asset manager, saw year-to-date inflows hit $330 million, according to its Q3 Investment Report. 

The report, released on Thursday, provides an overview of the firm's business over the last three months. Per the report, Grayscale raised $81.1 million in Q3. The $330 million figure outperforms inflows through three quarters in previous years. In the same amount of time, the firm brought in a mere $25 million in 2017 and $17 million in 2016. "This marks the strongest year-to-date inflows through September that we’ve experienced during any calendar year since the inception of our business." 

Michael Sonnenshein, a managing director at the firm, told The Block institutional investors are showing more interest in its family of crypto investment products than ever before. That's despite crypto markets being down 70% year-to-date. Institutional investors contributed to 70% of inflows in Q3. Institutional investors, year-to-date, made up 59% of inflows. The New York-based firm manages $1.5 billion, making it one of the largest investors of crypto in the world. 

Sonnenshein said that institutional investors are coming to the firm more informed about the digital asset market and approach the space with a long-term view.

"The conversations we are having are not bitcoin 101 or even bitcoin 201. They are conversations about use-cases. These are people who make decision around data. They are looking at transaction growth, scaling solutions, the number of nodes. And they are really diving into those metrics. And using them for a barometer to guage the health of a given asset. Investors are coming to the table so much better informed and that level of understanding is so much deeper."

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To be sure, Grayscale's products have felt the grip of the crypto bear market. With the exception of its bitcoin and ethereum classic investment products, net total returns for its 7 other funds are down double digits. 

Its Bitcoin Investment Trust is down 54.7% year-to-date, but it is up 4,635% since inception. 

Sonnenshein hinted at the addition of a new product to join Grayscale's family of funds by year end, but he said the firm "was not at a place yet to elaborate on that product."

Reporting by Frank Chaparro.

This post has been updated to note that Grayscale's ethereum classic fund has appreciated since its inception. 

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Frank Chaparro is the Editor At Large at The Block. Chaparro started his career at Business Insider, where he specialized in the intersection of digital assets and Wall Street, market structure, and financial technology. Soon after joining Business Insider out of Fordham University, Chaparro was interviewing top finance and tech executives, including billionaire Mark Cuban, “Flash Boys” star Brad Katsuyama, Cboe Global Markets CEO Ed Tilly, and New York Stock Exchange President Tom Farley. In 2018, he become a sought after reporter in the crypto world, interviewing luminaries such as Tyler Winklevoss, the cofounder of Gemini, Jeremy Allaire, the CEO of Circle, and Fundstrat head Tom Lee. He runs his own podcast The Scoop and writes a biweekly eponymous newsletter. He leads special projects, including The Block's flagship podcast, The Scoop. Prior to The Block, he held roles at Business Insider, NPR, and Nasdaq. For inquiries or tips, email [email protected].