Estimated data shows cryptocurrency asset management firm Grayscale purchased close to half of all mined Ethereum in 2020. What’s more, with Ethereum 2.0 drawing closer, many have speculated that institutional investors are looking to reap the benefits of ETH staking.
Institutional Interest in Ethereum Taking Off
Grayscale is currently the world’s largest cryptocurrency asset manager, with $2.2 billion under management. The firm provides digital currency exposure for institutional investors, and high-net-worth individuals, through traditional investment vehicles that have underlying crypto assets. This works via issuance of publicly quoted shares in Grayscale trusts, which are titled securities and IRA eligible.
The Grayscale Ethereum Trust is their second-largest offering in terms of holdings, with $141.5 million under management.
While trust performance is negative both as trailing 12-month and since inception, it was formed only at the tail end of the last bull run. And so, has yet to benefit from a complete bull cycle.
As such, it’s clear that many institutional investors are anticipating big moves from Ethereum going forward.
Grayscale Hungry For Ethereum
With that, a recent post on Reddit analyzed data from Grayscale’s 2019 Ethereum Trust Annual Report, which, when combined with publically available data, show Grayscale has purchased 48% of all Ethereum mined in 2020 so far.
A breakdown of the data shows Grayscale Ethereum Trust has a total share issuance of 13,255,400, with 5,230,200 shares as of 31st December 2019. The difference being 8,025,200, which equates to new shares issued in 2020. When multiplied by Grayscale’s ETH per share price of 0.09427052, it shows they purchased 756,540 Ethereum in 2020.
Publicly available data puts total Ethereum issuance, since the start of 2020, at 1,563,246. As such 756,540 represents 48% of all the mined Ethereum this year.
No Confirmed Release date for ETH 2.0
Institutional investors are betting big on Ethereum. Part of the reason why is undoubtedly the up and coming ETH 2.0 release, which emphasizes the trend towards decentralization.
Recognition of the market direction shows that decentralization is more than a buzzword. Indeed, as evidenced by activity on Grayscale’s Ethereum Trust, the flow of money signals approval of this trend.
Colin Schwarz of ChainSafe wrote about the dynamics of the outdated proof-of-work systems. He believes Ethereum’s move towards a more energy-efficient proof-of-stake model will go some way to democratizing crypto for all.
“They are also susceptible to market monopolization because they bestow unfair advantages on actors with more resources. Wealthy and powerful individuals and organizations can afford a larger number of much faster and more powerful computers, which gives them a much higher chance of successfully solving each cryptographic puzzle and earning the reward.”
Moreover, a successful rollout of ETH 2.0 would put Ethereum at a major technological advantage over Bitcoin. And when combined with Ethereum’s network effect, and already significant market cap, could accelerate a flippening between the two.
With that, expectations for ETH 2.0 are high, and while there’s no confirmed release date as yet, the institutions are already staking their claim.