April 07 2021 10:15, UTC
Reading time: ~3 m
The first quarter of 2021 was an explosive one, with Bitcoin price surging more than 100% and Ethereum over 190%. This, in part, has been thanks to inflows into cryptocurrency funds and products hitting a record $4.5 billion.
The first quarter inflows show an 11% increase from the last quarter of 2020, when it was $3.9 billion, as per the data from digital currency manager Coin Shares.
These numbers suggest increased institutional participation. However, the growth in Q1 was slower than 4Q20’s 240%. But this was not “indicative of a broader slowing trend, as quarterly growth rates tend to be highly varied,” Coin Shares said in the report.
To start Q2, while BTC is still taking its time to reach nearly $62k ATH, this is turning out to be beneficial for altcoins as the overall crypto market cap surpassed $2 trillion. Ethereum actually hit a new ATH at $2,050.
In the first quarter, Bitcoin had the most inflows, like always, at $3.5 billion, followed by Ethereum, which posted $765 million in investments.
“There’s so much momentum that’s building, and people are scrambling to see where the other coins, aside from bitcoin, are going,” said Edward Moya, senior market analyst at trading platform OANDA.
AUM Continues to Soar
When it comes to crypto assets under management, they also soared to a peak of $59 billion, up from $37.6 billion last year high, CoinShares data showed. CoinShares itself oversees about $5.1 billion in assets.
Of the $59 billion in AUM, active investment managers represented a mere 1.5% of total assets under management, down from 3.6% at the start of the fourth quarter last year.
The largest digital asset manager, Grayscale, meanwhile maintained its top position with $46.1 billion in assets. The asset manager plans to convert its Grayscale Bitcoin Trust (GBTC) into a Bitcoin ETF
as its popular premium continues to trade in the negative since late Feb. because of the new entrants, especially the launch of Bitcoin ETFs in Canada.
An activist family office that owns shares of GBTC meanwhile is demanding a tender offer to boost prices. As of March 31, the share price trading at a discount has recorded a $3.1 billion loss to shareholders compared with the Bitcoin it holds, as per a letter sent by Marlton LLC to the board of Grayscale.
Marlton said Grayscale wasn’t doing enough to increase shareholder value and recommends a “clear capital allocation plan via a tender offer in GBTC.”
“We are frustrated that the board might allow management to squander the company’s leading market share to the detriment of GBTC stockholders, whilst simultaneously rewarding yourselves handsomely with a profligate, market-leading, 2% management fee,” said
James Elbaor, who runs the Marlton office, in the letter. “Marlton and other stockholders will not tolerate such clear destruction of stockholder value.”