Grayscale Investments, which offers investors access to Bitcoin and other cryptocurrencies in the form of shares, on Tuesday reported a record third-quarter inflow of over a quarter of a billion dollars.
In a report, the New York-based investment firm said Q3 inflows amounted to $254.9 million, which is triple the $85 million it posted the previous quarter, and that 84% of the new funds came from hedge funds and other institutional investors.
Grayscale’s third quarter investment figure is striking in part because the crypto market has been in a slump during this time. While a rally earlier this year saw the price of Bitcoin hit $12,000 in July, its value has fallen by around a third since then.
According to Grayscale’s managing director, Michael Sonnenshein, the record inflows are the result of a growing number of professional investors deciding to make cryptocurrencies a part of their portfolio mix. He also credited the company’s recent “Drop Gold” advertising blitz, which encourages investors to buy crypto rather than precious metal—a choice Grayscale says is appealing to younger people.
“When the world gets to be the way it is at the moment, these institutions want a new source of alpha,” said Sonnenshein, referring to investments that can out-perform the market. “There’s also a growing acceptance that younger generations want a part of this asset class.”
But while Grayscale touts the appeal of various digital assets, its report shows that 67% of third quarter investments went into the company’s Bitcoin Trust shares, while virtually all the rest went to shares of other cryptocurrencies, Ethereum and Ethereum Classic. Other Grayscale offerings such as XRP and Zen attracted virtually no interest.
Sonnenshein explains the disproportionate interest in the company’s products as a function of liquidity. Specifically, Grayscale customers—who must be accredited investors—can sell their shares a year later in the public market, but only in the case of Bitcoin, Ethereum, and Ethereum Classic.
Grayscale is asking regulators to allow this liquidity option for its other products, says Sonnenshein, adding he expects interest to spike if they receive approval. Meanwhile, the company received approval this week from regulator FINRA to sell shares of its Digital Large Cap Fund—an ETF-like investment made up different cryptocurrencies—to the general public.
The Grayscale report also notes that the majority of investors in the third quarter bought shares using cryptocurrency rather cash—in most cases, trading actual Bitcoin for shares in a Bitcoin trust.
Sonnenshein says such decisions are likely the result of institutional investors lacking the legal and security infrastructure to hold actual cryptocurrency, which is vulnerable to being hacked. Shares in a crypto trust provide an easier option, he suggests.
The service, however, comes at a cost: Grayscale clients pay a management fee of between 2% and 3% for owning the company’s products.
Grayscale expects to make a new advertising push in coming months. Citing the success of the “Drop Gold” ads, Sonnenshein says a similar campaign will launch in the near future.
More must-read stories from Fortune:
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—IRS’s new cryptocurrency rules create ‘messy’ problems for industry
—Ripple CEO not bullish on Facebook’s ability to launch Libra cryptocurrency
—7 CEOs on the future of Bitcoin
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