- The asset management firm, Grayscale, owns 1% of Ethereum’s total supply and has been increasing its purchase rate in 2020 to record levels.
- The asset management firm has an Ethereum-based trust that requires holding a large amount of ETH.
The asset management firm Grayscale continues to show interest in Ethereum. New data reveals that the firm owns 1% of the ETH supply as a result of an increase in Grayscale’s purchase rate in 2020. The firm is expected to continue to increase its purchase rate to maintain its Ethereum Trust.
Second on the list of its investment products offered by the asset management firm, the Ethereum Trust was introduced on December 14, 2017 and has about $140 million in funds. According to Grayscale, the Ethereum Trust allows investors to gain exposure to the cryptocurrency using a traditional method, without investors having to buy or hold ETH. Only the Bitcoin Trust has more funds with $1.9 billion, as can be seen in the image below.
To maintain the fund, as mentioned, Grayscale must hold a large amount of ETH on a wallet. In that regard, the data shows that Grayscale bought about 48% of the mined ETH as of April 24th of this year. Since January, about 1.5 million ETH have been mined. Of this amount, Grayscale has purchased about 756 thousand ETH.
Increased institutional interest in Ethereum
A recent report from Grayscale shows that the asset management firm has had one of its best quarters in recent years. Of the $503 million of investment it received in the first quarter of 2020, 88% came from institutional investors. In addition, the report showed that the Ethereum Trust accounted for the largest share of the firm’s investment inflows with $388.9 million.
In that sense, Ethereum could be at a crucial moment that marks the beginning of an unprecedented institutional investment for cryptocurrencies. In the coming months, Grayscale should continue to increase the purchase of ETH to maintain the fund, in relation to the increase in investment it receives. The asset management firm expects this trend to increase as institutions “strengthen the investment thesis” for the Ethereum.
According to Three Arrow Capital’s CEO, Su Zhu, Ethereum is attracting the attention of investors who see it as a kind of “digital real estate”. That is, as a scarce property that provides profit by fee or share in the network. In the long term, ETH could become an even scarcer asset. According to analyst Adam Cochran, Ethereum 2.0 will be bullish for ETH. Cochran believes there will be a supply shock when the level of ETH staked begin to rise and, consequently, there will be an increase in demand for ETH. Zhu and Cochran predict a highly bullish outlook for Ethereum.
At the time of publication, ETH is trades at $193 with a sideways movement to the downside (0.97) in the last 24 hours. In the weekly and monthly charts, however, ETH shows gains of 8.37% and 49.69% respectively.