Bitcoin prices continue to drag lower this year as retail interest fizzles. But institutional investors seem to be picking up that slack, and led the world's largest digital currency investment firm to notch record inflows this year.
New York- based Grayscale, a subsidiary of Digital Currency Group, brought in $81.1 million in total investments for the third quarter, according to a company report published Thursday. The 33 percent uptick from the previous three months brings Grayscale's inflows for the year to $330 million, its strongest year-to-date total since the firm started five years ago. At this time last year, the firm had raised a total $25.4 million by comparison. The firm now has $1.5 billion in customer assets.
"Bitcoin prices doing nothing but go down the entire year has not deterred our existing clients from putting more capital to work," Michael Sonnenshein, managing director of Grayscale Investment, told CNBC. "Asset inflows are really strong despite these price declines."
Of those inflows, roughly 70 percent were from institutional investors, meaning hedge funds, pensions or endowments. Grayscale's nine cryptocurrency products are only available to accredited investors, not retail buyers who helped boost prices 1,300 percent last year. Grayscale's other clients are mostly high net-worth individuals or family offices.
Despite the rise of smaller alternatives like ether or XRP known as "alt coins," bitcoin is still "king" of cryptocurrencies for investors, Grayscale said,
In the third quarter, 73 percent of inflows were into the Bitcoin Investment Trust, which trades on over the over-the-counter markets under the ticker GBTC. Despite being "king," bitcoin is still down more than 55 percent this year and was trading near $6,300 Thursday, according to data from CoinDesk.