Digital Asset

Investment
Report
Q1 2020

grayscale.co
Q1 | 2020

Digital Asset
Digital Asset
Investment
Report

Investment
TOTAL AUM1

$2.2B
Report
First Quarter of 2020 (“1Q20”) Highlights2
• Total Investment into Grayscale Products: $503.7 million
• Average Weekly Investment – All Products: $38.7 million
• Average Weekly Investment – Grayscale Bitcoin Trust: $29.9 million
• Average Weekly Investment – Grayscale Ethereum Trust: $8.5 million
• Average Weekly Investment – Grayscale Products ex Bitcoin Trust3: $8.8 million
• Majority of investment (88%) came from institutional investors, dominated by hedge funds.

Trailing 12-Month (“T12M”) Highlights4

• Total Investment into Grayscale Products: $1.07 billion
• Average Weekly Investment – All Products: $20.6 million
• Average Weekly Investment – Grayscale Bitcoin Trust: $15.7 million5
• Average Weekly Investment – Grayscale Ethereum Trust: $4.0 million
• Average Weekly Investment – Grayscale Products ex Bitcoin Trust6: $4.8 million
• Majority of investment (79%) came from institutional investors, dominated by hedge funds.

The Takeaway
Largest Quarterly Raise in Grayscale History: Grayscale raised $503.7 million in 1Q20,
©2020 Grayscale Investments, LLC

nearly double the previous quarterly high of $254.8 million in 3Q19. New investors accounted
for $160.1 million in inflows. Grayscale Bitcoin Trust and Grayscale Ethereum Trust both
experienced record quarterly inflows of $388.9 million and $110.0 million, respectively.

1. As of March 31, 2020.

2. For the period from January 1, 2020 through March 31, 2020.
3. “Grayscale Products ex Bitcoin Trust” include Grayscale Bitcoin Cash Trust, Grayscale Ethereum Trust, Grayscale Ethereum Classic Trust, Grayscale
Horizen Trust, Grayscale Litecoin Trust, Grayscale Stellar Lumens Trust, Grayscale XRP Trust, Grayscale Zcash Trust, and Grayscale Digital Large Cap Fund.
4. For the period from April 1, 2019 through March 31, 2020.
5. Grayscale Bitcoin Trust was periodically closed to new investment throughout 2019.
6. See footnote 3.

PLEASE REVIEW IMPORTANT DISCLOSURES & OTHER INFORMATION AT THE END OF THIS REPORT.
ASSETS UNDER MANAGEMENT (AUM), INFLOWS, TOTAL INVESTMENT AND AVERAGE WEEKLY INVESTMENT ARE CALCULATED USING THE DIGITAL
ASSET REFERENCE RATE FOR EACH PRODUCT, WHICH ARE NOT MEASURES CALCULATED IN ACCORDANCE WITH GAAP. SEE NON-GAAP MEASURES
FOR MORE
PLEASE INFORMATION.
REVIEW UNLESS
IMPORTANT OTHERWISE &
DISCLOSURES NOTED,
OTHERALL FIGURES INCLUDED
INFORMATION HEREIN
AT THE ARETHIS
END OF CALCULATED
REPORT. USING NON-GAAP METHODOLOGIES. 2
Q1 | 2020

Billion Dollar Year: For the first time, inflows into Grayscale products over a 12-month period
crossed the $1 billion threshold ($1.07 billion), showing strong and sustained evidence that
investors are increasing their digital asset exposure at current levels. Cumulative investment
across the Grayscale family of products since inception has reached $1.68 billion.7
Digital Asset
Investment Hedge Fund Investment Gains Steam: 88% of inflows this quarter came from institutional
Report investors, the overwhelming majority of which were hedge funds. The mandate and strategic
focus of these funds is broadly mixed and includes Multi-Strat, Global Macro, Arbitrage,
Long/Short Equity, Event Driven, and Crypto-focused funds.

Investors Further Diversify: Approximately 38% of investors now have allocations to multiple
products within the Grayscale family, up from 29% at the end of 1Q19.

Quarterly Perspective
It’s been a rough start to the new decade for nearly all risk assets and currencies as a result of
the Coronavirus Pandemic. As the virus gained momentum in March, disrupting markets and
economies across the globe, the clear winning trade has been ‘long volatility.’

FIGURE 1: MULTI-ASSET CLASS PERFORMANCE – 1Q208

DECEMBER 31, 2019 THROUGH MARCH 31, 2020

VIX Index 289%

Zcash (ZEC) 11%
Ethereum Classic (ETC) 10%
Bitcoin Cash (BCH) 7%
COMEX Gold Index 4%
Ethereum (ETH) 2%
Japanese Yen (JPY) 1%
Swiss Franc (CHF) 1%
Bloomberg Barclays Global Bond Index 0%
Euro (EUR) -2%
Chinese Renminbi (RMB) -2%
DJCME Spot FX Index -2%
Singapore Dollar (SGD) -5%
British Pound (GBP) -6%
Litecoin (LTC) -6%
Argentine Peso (ARS) -7%
Canadian Dollar (CAD) -8%
Thai Baht (THB) -8%
Grayscale Digital Large Cap Fund -9%
XRP (XRP) -9%
Stellar Lumens (XLM) -10%
Bitcoin (BTC) -11%
Nasdaq Composite -14%
S&P 500 Index -20%
Russian Ruble (RUB) -20%
©2020 Grayscale Investments, LLC

MSCI World Index -21%

Brazilian Real (BRL) -23%
MSCI EAFE Index -23%
Bloomberg Commodity Index -24%
MSCI Emerging Markets Index -24%
Horizen (ZEN) -33%

Despite the risk asset drawdown this quarter, Grayscale’s assets under management (“AUM”)
continues towards all-time highs, as does our share of the digital asset market. For context, AUM
is a function of both price changes and inflows.

7. Inception date: September 25, 2013.

8. Source: Bloomberg, CoinMarketCap.com, Grayscale. PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RETURNS.

PLEASE REVIEW IMPORTANT DISCLOSURES & OTHER INFORMATION AT THE END OF THIS REPORT. 3
Q1 | 2020

FIGURE 2: GRAYSCALE AUM SINCE INCEPTION

SEPTEMBER 25, 2013 THROUGH MARCH 31, 2020 AUM: $2.2B

$3,500

Digital Asset Index Grayscale

$3,000
Investment AUM Growth (Cumulative) 95,491.6%
Report
AUM Growth (Annualized) 186.5%
$2,500
AUM Growth ($MM) Standard Deviation (Annualized) 73.6%

$2,000

$1,500

$1,000

$500

$0
Sep-13

Dec-13

Mar-14

Jun-14

Sep-14

Dec-14

Mar-15

Jun-15

Sep-15

Dec-15

Mar-16

Jun-16

Sep-16

Dec-16

Mar-17

Jun-17

Sep-17

Dec-17

Mar-18

Jun-18

Sep-18

Dec-18

Mar-19

Jun-19

Sep-19

Dec-19

Mar-20
FIGURE 3: GRAYSCALE MARKET SHARE SINCE INCEPTION9
SEPTEMBER 25, 2013 THROUGH MARCH 31, 2020

Grayscale Bitcoin Trust as % of Circulating Bitcoin Supply

1.80%
1.80%
Grayscale AUM as % of Total Digital Asset Market Cap
Grayscale Bitcoin Trust as % of Circulating Bitcoin Supply
1.7%
1.60%
1.60%
Grayscale AUM as % of Total Digital Asset Market Cap
1.40%
1.40%

1.20%
1.20%
1.2%
Market Share (%)
Market Share (%)

1.00%
1.00%

0.80%
0.80%

0.60%
0.60%

0.40%
0.40%

0.20%
0.20%
©2020 Grayscale Investments, LLC

0.00%
0.00%
Q313 Q413 Q114 Q214 Q314 Q414 Q115 Q215 Q315 Q415 Q116 Q216 Q316 Q416 Q117 Q217 Q317 Q417 Q118 Q218 Q318 Q418 Q119 Q219 Q319 Q419 Q120
Sep-13

Dec-13

Mar-14

Jun-14

Sep-14

Dec-14

Mar-15

Jun-15

Sep-15

Dec-15

Mar-16

Jun-16

Sep-16

Dec-16

Mar-17

Jun-17

Sep-17

Dec-17

Mar-18

Jun-18

Sep-18

Dec-18

Mar-19

Jun-19

Sep-19

Dec-19

Mar-20

Axis Title

Many of our investors view digital assets as a medium to long-term investment opportunity
and a core component of their investment portfolios. They are tactically using drawdowns
to increase their exposure to the asset class, which they are now doing at the fastest pace
in Grayscale history. Quarter-over-quarter inflows more than doubled to $503.7 million,
demonstrating demand is reaching new peak levels, even in a “risk-off” environment.

9. Source: CoinMarketCap.com

PLEASE REVIEW IMPORTANT DISCLOSURES & OTHER INFORMATION AT THE END OF THIS REPORT. 4
Q1 | 2020

FIGURE 4: GRAYSCALE CUMULATIVE QUARTERLY INFLOWS SINCE INCEPTION

SEPTEMBER 25, 2013 THROUGH MARCH 31, 2020

Bitcoin Ethereum XRP Stellar Lumens

Ethereum Classic Digital Large Cap Litecoin
Zcash Bitcoin Cash Zen
Digital Asset
Investment
Report $1,800,000,000

$1,600,000,000 Total: $1.68B

Quarter-over-quarter
inflows more than
$1,400,000,000
doubled to $503.7
million.
$1,200,000,000

$1,000,000,000

$800,000,000

$600,000,000

$400,000,000

$200,000,000

$0
Dec-13

Mar-14

Jun-14

Sep-14

Dec-14

Mar-15

Jun-15

Sep-15

Dec-15

Mar-16

Jun-16

Sep-16

Dec-16

Mar-17

Jun-17

Sep-17

Dec-17

Mar-18

Jun-18

Sep-18

Dec-18

Mar-19

Jun-19

Sep-19

Dec-19

Mar-20
Institutional investor demand for Grayscale’s products has continued to gain momentum.
With approximately 90% of capital raised coming from institutions since inception, particularly
hedge funds, we took a lens to the hedge fund subset, delineating the following groupings
and associated percentages:

FIGURE 5: GRAYSCALE HEDGE FUND INVESTOR PROFILES BY STRATEGY

5.2%
7.2%

10.8% Multi-Strat
Long-Short Equity
Crypto
46.1% Risk Arbitrage
11.2%
Global Macro
©2020 Grayscale Investments, LLC

Event Driven

19.5%

Another noticeable trend explores our individual investor segment. Almost half of the inflows
from this group have come in the form of tax-advantaged capital (i.e., 401Ks, IRAs, retirement
accounts) since inception (45%), demonstrating a long-term investment orientation.

PLEASE REVIEW IMPORTANT DISCLOSURES & OTHER INFORMATION AT THE END OF THIS REPORT. 5
Q1 | 2020

FIGURE 6: GRAYSCALE INDIVIDUAL INVESTOR PROFILES

Digital Asset
Investment Non-Tax-Advantaged Accounts
Report 45% 55% Tax-Advantaged Accounts (i.e. 401Ks, IRAs, retirement accounts)

This reinforces that digital assets aren’t just an investment opportunity for a select cohort of
investors. Many investors are searching deeper than ever for new, uncorrelated sources of
return in a challenging investment environment.

In Figure 7, we show the T12M dollar-denominated inflows to the Grayscale family of

investment products as a percentage of AUM. This metric may serve as a proxy for broad-
based investment into digital asset markets, which has important implications for future price
action. Many investors view large capital inflows relative to asset prices as a fundamental sign
of perceived value and potential future price momentum.

FIGURE 7: GRAYSCALE T12M INFLOWS AS % OF AUM SINCE INCEPTION

SEPTEMBER 25, 2013 THROUGH MARCH 31, 2020

Index Grayscale

Max Trailing 12-Month Inflow (% of AUM) 144.9%

Average Trailing 12-Month Inflow (% of AUM) 27.5%

Median Trailing 12-Month Inflow (% of AUM) 18.7% Grayscale AUM Growth (% Cumulative ln)
Grayscale Drawdowns (%)
Current Trailing 12-Month Inflow (% of AUM) 48.8%
Trailing 12-Month Inflows as % of Grayscale AUM

150%
150%
?
400%
400%
125%
125%

Grayscale AUM Growth (% Cumulative ln)

100% 300%

Grayscale AUM Growth (% Cumulative ln)

100% 300%
Drawdowns & Inflows/AUM (%)

Drawdowns & Inflows/AUM (%)

75%
75%
200%
200%
©2020 Grayscale Investments, LLC

50%
50%
100%
100%
25%
25%

0%0% 0%
0%

-25%
-25%
-100%
-100%

-50%
-50%
-200%
-200%
-75%
-75%

-100%
-100% -300%
-300%
Sep-14

Dec-14

Mar-15

Jun-15

Sep-15

Dec-15

Mar-16

Jun-16

Sep-16

Dec-16

Mar-17

Jun-17

Sep-17

Dec-17

Mar-18

Jun-18

Sep-18

Dec-18

Mar-19

Jun-19

Sep-19

Dec-19

Mar-20

PLEASE REVIEW IMPORTANT DISCLOSURES & OTHER INFORMATION AT THE END OF THIS REPORT. 6
Q1 | 2020

In 1Q20, this metric reached its highest level since 4Q18 – the trough of the current
drawdown. While past performance is not an indicator of future returns, large increases
in dollar-denominated inflows relative to Grayscale AUM have historically preceded
market rallies. Though the number of observations is limited, and the effects may not be
Digital Asset immediate, it will be interesting to see how the next cycle plays out to gauge the strength
Investment and validity of this signal.
Report

Consistently, Grayscale investors recognize the benefits of adding digital currency

exposure to their portfolios for its diversification benefits. While many of our investors’
initial allocations to the asset class are most often to Bitcoin through an investment in
Grayscale Bitcoin Trust or Grayscale Digital Large Cap Fund (~80% Bitcoin), there has been
a noticeable uptick in investors further diversifying their allocations within the asset class
given the potential to achieve higher risk-adjusted returns. Approximately 38% of investors
have now invested in multiple Grayscale products, a significant uptick from 29% in 1Q19.

FIGURE 8: GRAYSCALE INVESTOR PROFILE BY PRODUCT MIX – T12M

APRIL 1, 2019 THROUGH MARCH 31, 2020

40% 38%
36% 36%
35% 33%
29%
Allocating to Multiple Products

30%
Percentage of Investors

25%

20%

15%

10%

5%

0%
Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020

Next, we’ll provide our standard series of investment activity analytics for 1Q20 and T12M.
©2020 Grayscale Investments, LLC

PLEASE REVIEW IMPORTANT DISCLOSURES & OTHER INFORMATION AT THE END OF THIS REPORT. 7
 Report
Investment
©2020 Grayscale Investments, LLC

Digital Asset
Q1 | 2020

$0
$100,000,000
$200,000,000
$300,000,000
$400,000,000
$500,000,000
$600,000,000

$400,000,000
$1,200,000,000

$0
$200,000,000
$600,000,000
$800,000,000
$1,000,000,000

$0
$200,000,000
$400,000,000
$600,000,000
$800,000,000
$1,000,000,000
$1,200,000,000
07-Apr-19
07-Apr-19
14-Apr-19 07-Jan-20
14-Apr-19
21-Apr-19
21-Apr-19
28-Apr-19
28-Apr-19
05-May-19
05-May-19
12-May-19
12-May-19 14-Jan-20
19-May-19
19-May-19
26-May-19
26-May-19
02-Jun-19
02-Jun-19

Zcash
Zcash

21-Jan-20

Bitcoin
Bitcoin

09-Jun-19
09-Jun-19
16-Jun-19
16-Jun-19

APRIL 1, 2019 THROUGH MARCH 31, 2020

23-Jun-19
23-Jun-19
30-Jun-19
30-Jun-19

Ethereum Classic
Ethereum Classic

07-Jul-19
JANUARY 1, 2020 THROUGH MARCH 31, 2020

07-Jul-19 28-Jan-20
14-Jul-19
14-Jul-19
21-Jul-19
21-Jul-19
28-Jul-19
28-Jul-19
04-Aug-19
04-Aug-19 04-Feb-20
11-Aug-19
11-Aug-19
18-Aug-19
18-Aug-19

Ethereum
Ethereum

25-Aug-19
25-Aug-19

Bitcoin Cash
Bitcoin Cash

01-Sep-19
01-Sep-19 11-Feb-20
08-Sep-19
08-Sep-19

Digital Large Cap

Digital Large Cap

15-Sep-19
15-Sep-19
22-Sep-19
22-Sep-19

Total: $1.07B
29-Sep-19
Total: $503.7M

29-Sep-19 18-Feb-20
06-Oct-19
06-Oct-19
13-Oct-19
13-Oct-19

Zen
Zen

XRP
XRP

20-Oct-19
20-Oct-19
FIGURE 9: GRAYSCALE CUMULATIVE INFLOWS BY PRODUCT – 1Q20

Litecoin
Litecoin

FIGURE 10: GRAYSCALE CUMULATIVE INFLOWS BY PRODUCT – T12M

27-Oct-19
27-Oct-19
03-Nov-19 25-Feb-20
03-Nov-19
10-Nov-19
10-Nov-19
17-Nov-19

PLEASE REVIEW IMPORTANT DISCLOSURES & OTHER INFORMATION AT THE END OF THIS REPORT.
17-Nov-19
24-Nov-19
24-Nov-19
01-Dec-19
01-Dec-19 03-Mar-20
08-Dec-19
08-Dec-19
15-Dec-19
15-Dec-19
22-Dec-19
22-Dec-19
Stellar Lumens
Stellar Lumens

29-Dec-19
29-Dec-19 10-Mar-20
05-Jan-20
05-Jan-20
12-Jan-20
12-Jan-20
Investment Activity through the Grayscale Lens

19-Jan-20
19-Jan-20
Grayscale raised $503.7 million in 1Q20, bringing T12M inflows to $1.07 billion.

26-Jan-20
26-Jan-20 17-Mar-20
02-Feb-20
02-Feb-20
09-Feb-20
09-Feb-20
16-Feb-20
16-Feb-20
23-Feb-20
23-Feb-20 24-Mar-20
01-Mar-20
01-Mar-20
08-Mar-20
08-Mar-20
15-Mar-20
15-Mar-20
22-Mar-20
22-Mar-20 31-Mar-20

8
29-Mar-20
29-Mar-20
Q1 | 2020

Average weekly investment across all products in 1Q20 was $38.7 million, while average
weekly investment for T12M was $20.6 million.

FIGURE 11: GRAYSCALE WEEKLY INFLOWS ALL PRODUCTS – 1Q20

Digital Asset JANUARY 1, 2020 THROUGH MARCH 31, 2020
Investment
Bitcoin Ethereum XRP Stellar Lumens
Report
Ethereum Classic Digital Large Cap Litecoin
Zcash Bitcoin Cash Zen Total Weekly Average

$140,000,000 Average: $38.7M

$120,000,000

$100,000,000

$80,000,000

$60,000,000

$40,000,000

$20,000,000

$0
07-Jan-20

14-Jan-20

21-Jan-20

28-Jan-20

04-Feb-20

11-Feb-20

18-Feb-20

25-Feb-20

03-Mar-20

10-Mar-20

17-Mar-20

24-Mar-20

31-Mar-20
FIGURE 12: GRAYSCALE WEEKLY INFLOWS ALL PRODUCTS – T12M
APRIL 1, 2019 THROUGH MARCH 31, 2020

Bitcoin Ethereum XRP Stellar Lumens

Ethereum Classic Digital Large Cap Litecoin
Zcash Bitcoin Cash Zen Total Weekly Average

Average: $20.6M
$160,000,000

$140,000,000

$120,000,000

$100,000,000

$80,000,000
©2020 Grayscale Investments, LLC

$60,000,000

$40,000,000

$20,000,000

$0
07-Apr-19
14-Apr-19
21-Apr-19
28-Apr-19
05-May-19
12-May-19
19-May-19
26-May-19
02-Jun-19
09-Jun-19
16-Jun-19
23-Jun-19
30-Jun-19
07-Jul-19
14-Jul-19
21-Jul-19
28-Jul-19
04-Aug-19
11-Aug-19
18-Aug-19
25-Aug-19
01-Sep-19
08-Sep-19
15-Sep-19
22-Sep-19
29-Sep-19
06-Oct-19
13-Oct-19
20-Oct-19
27-Oct-19
03-Nov-19
10-Nov-19
17-Nov-19
24-Nov-19
01-Dec-19
08-Dec-19
15-Dec-19
22-Dec-19
29-Dec-19
05-Jan-20
12-Jan-20
19-Jan-20
26-Jan-20
02-Feb-20
09-Feb-20
16-Feb-20
23-Feb-20
01-Mar-20
08-Mar-20
15-Mar-20
22-Mar-20
29-Mar-20

*Grayscale Bitcoin Trust was periodically closed to new investment throughout 2019.

PLEASE REVIEW IMPORTANT DISCLOSURES & OTHER INFORMATION AT THE END OF THIS REPORT. 9
Q1 | 2020

In 1Q20, inflows to Grayscale Bitcoin Trust hit $388.9 million, the highest level we’ve seen in
a single quarter, surpassing the previous high of $193.8 million raised in 4Q19. This brought
T12M Grayscale Bitcoin Trust inflows to $818.5 million.

Digital Asset FIGURE 13: GRAYSCALE BITCOIN TRUST CUMULATIVE WEEKLY INFLOWS – 1Q20
Investment JANUARY 1, 2020 THROUGH MARCH 31, 2020
Report Bitcoin

Total: $388.9M

$400,000,000

$350,000,000

$300,000,000

$250,000,000

$200,000,000

$150,000,000

$100,000,000

$50,000,000

$0
07-Jan-20

14-Jan-20

21-Jan-20

28-Jan-20

04-Feb-20

11-Feb-20

18-Feb-20

25-Feb-20

03-Mar-20

10-Mar-20

17-Mar-20

24-Mar-20

31-Mar-20
FIGURE 14: GRAYSCALE BITCOIN TRUST CUMULATIVE WEEKLY INFLOWS – T12M
APRIL 1, 2019 THROUGH MARCH 31, 2020
Bitcoin

Total: $818.5M

$900,000,000

$800,000,000

$700,000,000

$600,000,000

$500,000,000
©2020 Grayscale Investments, LLC

$400,000,000

$300,000,000

$200,000,000

$100,000,000

$0
07-Apr-19
14-Apr-19
21-Apr-19
28-Apr-19
05-May-19
12-May-19
19-May-19
26-May-19
02-Jun-19
09-Jun-19
16-Jun-19
23-Jun-19
30-Jun-19
07-Jul-19
14-Jul-19
21-Jul-19
28-Jul-19
04-Aug-19
11-Aug-19
18-Aug-19
25-Aug-19
01-Sep-19
08-Sep-19
15-Sep-19
22-Sep-19
29-Sep-19
06-Oct-19
13-Oct-19
20-Oct-19
27-Oct-19
03-Nov-19
10-Nov-19
17-Nov-19
24-Nov-19
01-Dec-19
08-Dec-19
15-Dec-19
22-Dec-19
29-Dec-19
05-Jan-20
12-Jan-20
19-Jan-20
26-Jan-20
02-Feb-20
09-Feb-20
16-Feb-20
23-Feb-20
01-Mar-20
08-Mar-20
15-Mar-20
22-Mar-20
29-Mar-20

PLEASE REVIEW IMPORTANT DISCLOSURES & OTHER INFORMATION AT THE END OF THIS REPORT. 10
Q1 | 2020

In 1Q20, demand for Grayscale Products ex Bitcoin Trust grew to $114.8 million, up more than
260% from $31.6 million in 4Q19. This was almost entirely driven by inflows to Grayscale
Ethereum Trust ($110.0 million), bringing T12M inflows for Grayscale Products ex Bitcoin Trust
to $250.1 million.
Digital Asset
Investment
FIGURE 15: GRAYSCALE PRODUCTS EX BITCOIN TRUST CUMULATIVE WEEKLY INFLOWS – 1Q20
Report
JANUARY 1, 2020 THROUGH MARCH 31, 2020

Other
Ethereum

$120,000,000

Grayscale Ethereum Trust: $110.0M

$100,000,000 Other: $4.8M
Total: $114.8M

$80,000,000

$60,000,000

$40,000,000

$20,000,000

$0
07-Jan-20

14-Jan-20

21-Jan-20

28-Jan-20

04-Feb-20

11-Feb-20

18-Feb-20

25-Feb-20

03-Mar-20

10-Mar-20

17-Mar-20

24-Mar-20

31-Mar-20
FIGURE 16: GRAYSCALE PRODUCTS EX BITCOIN TRUST CUMULATIVE WEEKLY INFLOWS – T12M
APRIL 1, 2019 THROUGH MARCH 31, 2020

Other
Ethereum

$300,000,000

Grayscale Ethereum Trust: $205.8M

$250,000,000 Other: $44.3M
Total: $250.1M

$200,000,000
©2020 Grayscale Investments, LLC

$150,000,000

$100,000,000

$50,000,000

$0
07-Apr-19
14-Apr-19
21-Apr-19
28-Apr-19
05-May-19
12-May-19
19-May-19
26-May-19
02-Jun-19
09-Jun-19
16-Jun-19
23-Jun-19
30-Jun-19
07-Jul-19
14-Jul-19
21-Jul-19
28-Jul-19
04-Aug-19
11-Aug-19
18-Aug-19
25-Aug-19
01-Sep-19
08-Sep-19
15-Sep-19
22-Sep-19
29-Sep-19
06-Oct-19
13-Oct-19
20-Oct-19
27-Oct-19
03-Nov-19
10-Nov-19
17-Nov-19
24-Nov-19
01-Dec-19
08-Dec-19
15-Dec-19
22-Dec-19
29-Dec-19
05-Jan-20
12-Jan-20
19-Jan-20
26-Jan-20
02-Feb-20
09-Feb-20
16-Feb-20
23-Feb-20
01-Mar-20
08-Mar-20
15-Mar-20
22-Mar-20
29-Mar-20

PLEASE REVIEW IMPORTANT DISCLOSURES & OTHER INFORMATION AT THE END OF THIS REPORT. 11
Q1 | 2020

Investor Profiles
Institutional investors, primarily hedge funds, continued to be the primary source of invest-
ment capital in 1Q20 (88%), with an even higher share than T12M (79%).
Digital Asset
Investment
FIGURE 17: GRAYSCALE INVESTOR PROFILE BY SEGMENT 1Q20
Report
1Q20 VS. T12M
T12M

88%

79%

13%

5% 4% 6%
3% 2%

Institutional Accredited Retirement Family

Investors Individuals Accounts Offices

The geographic source of new investment capital this quarter was more heavily weighted
to offshore investors, while historically it has been roughly split between U.S. and offshore
investors.

FIGURE 18: GRAYSCALE INVESTOR PROFILE BY GEOGRAPHY 1Q20

1Q20 VS. T12M T12M

Chart Title
60% 57%
52%
50% 48%
43%
©2020 Grayscale Investments, LLC

40%

30%

20%

10%

0%
US Investors
U.S. Investors Offshore Investors
Offshore Investors
Q120 Trailing 12M

PLEASE REVIEW IMPORTANT DISCLOSURES & OTHER INFORMATION AT THE END OF THIS REPORT. 12
Q1 | 2020

Conclusion

Amidst a quarter characterized by significant broad-based volatility, demand for

Grayscale products continued to grow, and did so at a record pace. Investors are
Digital Asset tactically using drawdowns to increase their exposure to the asset class, even in a
Investment “riskoff” environment. Our institutional investor segment also continued to expand,
Report
a trend that could gain additional momentum as legacy financial institutions
reinforce the investment thesis for the asset class. Additionally, as existing
investors allocate to multiple products, the investment community should monitor
the expansion of increased demand for diversification within the asset class.
©2020 Grayscale Investments, LLC

PLEASE REVIEW IMPORTANT DISCLOSURES & OTHER INFORMATION AT THE END OF THIS REPORT. 13
Q1 | 2020

About Grayscale Investments®

Grayscale Investments is the world’s largest digital currency asset manager, with more
Digital Asset than $2.2B in assets under management as of March 31, 2020. Through its family of 10
Investment investment products, Grayscale provides access and exposure to the digital currency
Report
asset class in the form of a traditional security without the challenges of buying, storing,
and safekeeping digital currencies directly. With a proven track record and unrivaled
experience, Grayscale’s products operate within existing regulatory frameworks, creating
secure and compliant exposure for investors.

For more information, please visit www.grayscale.co and follow @GrayscaleInvest.

©2020 Grayscale Investments, LLC

PLEASE REVIEW IMPORTANT DISCLOSURES & OTHER INFORMATION AT THE END OF THIS REPORT. 14
Q1 | 2020

Non-GAAP Measures
“Assets under management” (AUM), “inflows”, “total investment” and “average weekly investment” are calculated using
the Digital Asset Reference Rate for each Grayscale Product, which are not measures calculated in accordance with
U.S. generally accepted accounting principles (“GAAP”). The net asset value of each Product determined on a GAAP
Digital Asset basis is referred to in this Report as “NAV.”
Investment
Report Each Product’s digital assets are carried, for financial statement purposes, at fair value, as required by GAAP. Each
Product determines the fair value of the digital assets it holds based on the price provided by the applicable Digital
Asset Exchange that the relevant Product considers its principal market as of 4:00 p.m., New York time, on the valuation
date. The cost basis of investments in the applicable digital asset recorded by the applicable Product is the fair value of
such digital asset, as determined by such Product, at 4:00 p.m., New York time, on the date of transfer to such Product
by the Authorized Participant based on the creation Baskets. The cost basis recorded by a Product may differ from
proceeds collected by the Authorized Participant from the sale of each Product’s Share to investors.

Each Product’s investment objective is for its Shares (based on digital assets per Share) to reflect the value of the
digital assets held by it, as determined by reference to the applicable Digital Asset Reference Rate, less such Product’s
expenses and other liabilities. There are two types of Digital Asset Reference Rates used by the Products: (i) a volume-
weighted average price in U.S. dollars of the digital assets held by a Product for the immediately preceding 24-hour
period as of 4:00 p.m., New York time, on each business day (each, a “VWAP Price”) and (ii) a volume-weighted
index price calculated by applying a weighting algorithm to the price and trading volume data of a digital asset for
the immediately preceding 24-hour period as of 4:00 p.m., New York time (each, an “Index Price”), in each case as
derived from data collected from the Digital Asset Exchanges trading such digital asset selected by TradeBlock, Inc.
(the “Reference Rate Provider”). Grayscale believes that calculating the Digital Asset Reference Rates in this manner
mitigates the impact of anomalistic or manipulative trading that may occur on any single digital asset exchange, and as
such, provides a more reliable price for the relevant digital asset.

Each Product’s AUM is calculated my multiplying such Product’s assets (other than U.S. dollars or other fiat currency),
less expenses and other liabilities, by the relevant Digital Asset Reference Rate, and as a result, it is not calculated in
accordance with GAAP. Investments are calculated by multiplying the number of digital assets received each day as
part of the creation process by that day’s Index Price. Total investment amounts reflect total capital raised using this
non-GAAP methodology during the periods presented in the report. Average weekly investments reflect the average
of the capital amounts raised using this non-GAAP methodology over the number of weeks in those respective periods.

The following tables show the Grayscale Bitcoin Trust’s total investments and average weekly investments using the
GAAP cost basis of such investments during the periods shown below as well as the price of Bitcoin on Grayscale
Bitcoin Trust’s principal market, the Digital Asset Reference Rate used by the Trust and the Grayscale Bitcoin Trust’s
AUM using the principal market price and Digital Asset Reference Rate.

Grayscale For the Quarter Ended Trailing 12-Month

Bitcoin Trust
(in millions) 6/30/2019 9/30/2019 12/31/2019 3/31/2020 3/31/2020

Total
$64.6 $164.1 $192.2 $389.4 $810.3
Investment
Average Weekly
$5.4 $12.6 $14.8 $30.0 $15.6
Investment

(AUM For the Quarter Ended

denominated
in millions) 6/30/2019 9/30/2019 12/31/2019 3/31/2020
©2020 Grayscale Investments, LLC

Price of Bitcoin on
$11,237.68 $8,283.71 $7,145.00 $6,474.20
principal market1
AUM using principal
$2,533.3 $1,976.9 $1,866.2 $1,972.2
market price
Digital Asset
$11,364.93 $8,065.08 $7,200.71 $6,466.48
Reference Rate2
AUM using Digital
$2,599.8 $1,924.7 $1,880.8 $1,969.9
Asset Reference Rate

1. The Trust performed an assessment of the principal market at December 31, 2019, 2018 and 2017, respectively, and identified the principal market as
Coinbase Pro.
2. Digital Asset Reference Rate means Bitcoin Index Price as defined in Grayscale Bitcoin Trust’s reports filed pursuant to the Securities Exchange Act
of 1934, as amended.

PLEASE REVIEW IMPORTANT DISCLOSURES & OTHER INFORMATION AT THE END OF THIS REPORT. 15
Q1 | 2020

Important Disclosures & Other Information

©Grayscale Investments, LLC. All content is original and has been researched and produced by
Digital Asset
Grayscale Investments, LLC (“Grayscale”) unless otherwise stated herein. No part of this content may
Investment be reproduced in any form, or referred to in any other publication, without the express consent of
Report Grayscale.

This report is for informational purposes only and does not constitute an offer to sell or the solicitation
of an offer to sell or buy any security in any jurisdiction where such an offer or solicitation would be
illegal. There is not enough information contained in this report to make an investment decision and
any information contained herein should not be used as a basis for this purpose. This report does
not constitute a recommendation or take into account the particular investment objectives, financial
situations, or needs of investors. Investors are not to construe the contents of this report as legal, tax
or investment advice, and should consult their own advisors concerning an investment in digital assets.
The price and value of assets referred to in this research and the income from them may fluctuate. Past
performance is not indicative of the future performance of any assets referred to herein. Fluctuations
in exchange rates could have adverse effects on the value or price of, or income derived from, certain
investments.

Investors should be aware that Grayscale is the sponsor of Grayscale Bitcoin Trust (BTC), Grayscale
Bitcoin Cash Trust (BCH), Grayscale Ethereum Trust (ETH), Grayscale Ethereum Classic Trust (ETC),
Grayscale Litecoin Trust (LTC), Grayscale Horizen Trust (ZEN), Grayscale Stellar Lumens Trust (XLM),
Grayscale XRP Trust (XRP) and Grayscale Zcash Trust (ZEC) (each, a “Trust”) and the manager of
Grayscale Digital Large Cap Fund LLC (the “Fund”). The Trusts and the Fund are collectively referred
to herein as the “Products”. Any Product currently offering Share creations is referred to herein as an
“Offered Product”. Information provided about an Offered Product is not intended to be, nor should it
be construed or used as investment, tax or legal advice, and prospective investors should consult their
own advisors concerning an investment in such Offered Product. This report does not constitute an offer
to sell or the solicitation of an offer to buy interests in any of the Products. Any offer or solicitation of an
investment in a Product may be made only by delivery of such Product’s confidential offering documents
(the “Offering Documents”) to qualified accredited investors (as defined under Rule 501(a) of Regulation
D of the U.S. Securities Act of 1933, as amended), which contain material information not contained
herein and which supersede the information provided herein in its entirety.

The Products are private investment vehicles. Shares of Grayscale Bitcoin Trust (BTC) and Grayscale
Digital Large Cap Fund, which are only offered on a periodic basis, are publicly quoted under the
symbols: GBTC and GDLCF, respectively. Except for Grayscale Bitcoin Trust (BTC), the Products are not
subject to the same regulatory requirements as exchange traded funds or mutual funds, including the
requirement to provide certain periodic and standardized pricing and valuation information to investors.
The Products are not registered with the Securities and Exchange Commission (the “SEC”) (except for
Grayscale Bitcoin Trust (BTC)), any state securities laws, or the U.S. Investment Company Act of 1940, as
amended. There are substantial risks in investing in one or more Products. Any interests in each Product
described herein have not been recommended by any U.S. federal or state, or non-U.S., securities
commission or regulatory authority, including the SEC. Furthermore, the foregoing authorities have
not confirmed the accuracy or determined the adequacy of this document. Any representation to the
contrary is a criminal offense.

Certain of the statements contained herein may be statements of future expectations and other
©2020 Grayscale Investments, LLC

forward-looking statements that are based on Grayscale’s views and assumptions and involve known
and unknown risks and uncertainties that could cause actual results, performance or events to differ
materially from those expressed or implied in such statements. In addition to statements that are
forward-looking by reason of context, the words “may, will, should, could, can, expects, plans, intends,
anticipates, believes, estimates, predicts, potential, projected, or continue” and similar expressions
identify forward-looking statements. Grayscale assumes no obligation to update any forward-looking
statements contained herein and you should not place undue reliance on such statements, which speak
only as of the date hereof. Although Grayscale has taken reasonable care to ensure that the information
contained herein is accurate, no representation or warranty (including liability towards third parties),
expressed or implied, is made by Grayscale as to its accuracy, reliability or completeness. You should
not make any investment decisions based on these estimates and forward-looking statements.

PLEASE REVIEW IMPORTANT DISCLOSURES & OTHER INFORMATION AT THE END OF THIS REPORT. 16
Q1 | 2020

Note On Hypothetical Simulated Performance Results

HYPOTHETICAL SIMULATED PERFORMANCE RESULTS HAVE CERTAIN INHERENT LIMITATIONS.

There is no guarantee that the market conditions during the past period will be present in the future.
Rather, it is most likely that the future market conditions will differ significantly from those of this past
Digital Asset period, which could have a materially adverse impact on future returns. Unlike an actual performance
Investment record, simulated results do not represent actual trading or the costs of managing the portfolio. Also,
Report since the trades have not actually been executed, the results may have under or over compensated for
the impact, if any, of certain market factors, such as lack of liquidity.

Simulated trading programs in general are also subject to the fact that they are designed with the
benefit of hindsight. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY
TO ACHIEVE PROFITS OR LOSSES SIMILAR TO THOSE SHOWN. PAST PERFORMANCE IS NOT
INDICATIVE OF FUTURE RESULTS.

The hypothetical simulated performance results are based on a model that used inputs that are based
on assumptions about a variety of conditions and events and provides hypothetical not actual results.
As with all mathematical models, results may vary significantly depending upon the value of the
inputs given, so that a relatively minor modification of any assumption may have a significant impact
on the result. Among other things, the hypothetical simulated performance calculations do not take
into account all aspects of the applicable asset’s characteristics under certain conditions, including
characteristics that can have a significant impact on the results. Further, in evaluating the hypothetical
simulated performance results herein, each prospective investor should understand that not all of the
hypothetical assumptions used in the model are described herein, and conditions and events that are
not accounted for by the model may have a significant adverse effect on the performance of the assets
described herein. Prospective investors should consider whether the behavior of these assets should
be tested based on different and/or additional assumptions from those included in the information
herein.

IN ADDITION TO OTHER DIFFERENCES, PROSPECTIVE INVESTORS IN A PRODUCT SHOULD

NOTE THE FOLLOWING POTENTIALLY SIGNIFICANT DIFFERENCES BETWEEN THE ASSUMPTIONS
MADE IN THE HYPOTHETICAL SIMULATED PERFORMANCE RESULTS INCLUDED HEREIN AND THE
CONDITIONS UNDER WHICH A PRODUCT WILL PERFORM, WHICH COULD CAUSE THE ACTUAL
RETURN OF SUCH PRODUCT TO DIFFER CONSIDERABLY FROM RETURNS SET FORTH BY THE
HYPOTHETICAL SIMULATED PERFORMANCE, TO BE MATERIALLY LOWER THAN THE RETURNS AND
TO RESULT IN LOSSES OF SOME OR ALL OF THE INVESTMENT BY PROSPECTIVE INVESTORS:

FOR EXAMPLE, EACH TRUST WILL HOLD ONLY ONE DIGITAL ASSET, WHEREAS THE HYPOTHETICAL
SIMULATED PERFORMANCE RESULTS ARE INTENDED TO SHOW HYPOTHETICAL PERFORMANCE
OF AN INVESTMENT MULTIPLE DIGITAL ASSETS. IN ADDITION, THE GENERAL MARKET DATA USED
IN THE HYPOTHETICAL SIMULATED PERFORMANCE RESULTS DO NOT REFLECT ACTUAL TRADING
ACTIVITY AND COULD NOT BE REPLICATED BY A PRODUCT IN ITS ACTUAL TRANSACTIONS. If actual
trading activity was executed at levels that differed significantly from the general market data used in
the hypothetical simulated performance, the actual returns achieved would have varied considerably
from the results of the hypothetical simulated performances and could have been substantially lower
and could result in significant losses.

IN ADDITION, THE HYPOTHETICAL SIMULATED PERFORMANCE RESULTS DO NOT ASSUME ANY

GAINS OR LOSSES FROM TRADING AND THEREFORE DO NOT REFLECT THE POTENTIAL LOSSES,
COSTS AND RISKS POSED BY TRADING AND HOLDING ACTUAL ASSETS.
©2020 Grayscale Investments, LLC

The hypothetical simulated performance results do not reflect the impact the market conditions may
have had upon a Product were it in existence during the historical period selected. The hypothetical
simulated performance results do not reflect any fees incurred by a Product. If such amounts had been
included in the hypothetical simulated performance, the results would have been lowered.

AS A RESULT OF THESE AND OTHER DIFFERENCES, THE ACTUAL RETURNS OF A PRODUCT MAY
BE HIGHER OR LOWER THAN THE RETURNS SET FORTH IN THE HYPOTHETICAL SIMULATED
PERFORMANCE RESULTS, WHICH ARE HYPOTHETICAL AND MAY NEVER BE ACHIEVED.
Reasons for a deviation may also include, but are by no means limited to, changes in regulatory and/or
tax law, generally unfavorable market conditions and the Risk Factors set forth below.

PLEASE REVIEW IMPORTANT DISCLOSURES & OTHER INFORMATION AT THE END OF THIS REPORT. 17
Q1 | 2020

Certain Risk Factors

Each Product is a private, unregistered investment vehicle and not subject to the same regulatory
requirements as exchange traded funds or mutual funds, including the requirement to provide certain
periodic and standardized pricing and valuation information to investors. There are substantial risks in
Digital Asset investing in a Product or in digital assets directly, including but not limited to:
Investment
Report • PRICE VOLATILITY
Digital assets have historically experienced significant intraday and long-term price swings. In
addition, none of the Products currently operates a redemption program and may halt creations
from time to time or, in the case of Grayscale Bitcoin Trust (BTC) and Grayscale Digital Large Cap
Fund, periodically. There can be no assurance that the value of the common units of fractional
undivided beneficial interest (“Shares”) of any Product will approximate the value of the digital
assets held by such Product and such Shares may trade at a substantial premium over or
discount to the value of the digital assets held by such Product. At this time, none of the Products
is operating a redemption program and therefore Shares are not redeemable by any Product.
Subject to receipt of regulatory approval from the SEC and approval by Grayscale, in its sole
discretion, any Product may in the future operate a redemption program. Because none of the
Products believes that the SEC would, at this time, entertain an application for the waiver of rules
needed in order to operate an ongoing redemption program, none of the Products currently has
any intention of seeking regulatory approval from the SEC to operate an ongoing redemption
program.

• MARKET ADOPTION
It is possible that digital assets generally or any digital asset in particular will never be broadly
adopted by either the retail or commercial marketplace, in which case, one or more digital assets
may lose most, if not all, of its value.

• GOVERNMENT REGULATION
The regulatory framework of digital assets remains unclear and application of existing regulations
and/or future restrictions by federal and state authorities may have a significant impact on the
value of digital assets.

• SECURITY
While each Product has implemented security measures for the safe storage of its digital assets,
there have been significant incidents of digital asset theft and digital assets remains a potential
target for hackers. Digital assets that are lost or stolen cannot be replaced, as transactions are
irrevocable.

• TAX TREATMENT OF VIRTUAL CURRENCY

For U.S. federal income tax purposes, Digital Large Cap Fund will be a passive foreign investment
company (a “PFIC”) and, in certain circumstances, may be a controlled foreign corporation
(a “CFC”). Digital Large Cap Fund will make available a PFIC Annual Information Statement
that will include information required to permit each eligible shareholder to make a “qualified
electing fund” election (a “QEF Election”) with respect to Digital Large Cap Fund. Each of the
other Products intends to take the position that it is a grantor trust for U.S. federal income tax
purposes. Assuming that a Product is properly treated as a grantor trust, Shareholders of that
Product generally will be treated as if they directly owned their respective pro rata shares of
the underlying assets held in the Product, directly received their respective pro rata shares
of the Product’s income and directly incurred their respective pro rata shares of the Product
©2020 Grayscale Investments, LLC

’s expenses. Most state and local tax authorities follow U.S. income tax rules in this regard.
Prospective investors should discuss the tax consequences of an investment in a Product with
their tax advisors.

• NO SHAREHOLDER CONTROL
Grayscale, as sponsor of each Trust and the manager of the Fund, has total authority over the
Trusts and the Fund and shareholders’ rights are extremely limited.

• LACK OF LIQUIDITY AND TRANSFER RESTRICTIONS

An investment in a Product will be illiquid and there will be significant restrictions on transferring
interests in such Product. The Products are not registered with the SEC, any state securities laws,
or the U.S. Investment Company Act of 1940, as amended, and the Shares of each Product are

PLEASE REVIEW IMPORTANT DISCLOSURES & OTHER INFORMATION AT THE END OF THIS REPORT. 18
Q1 | 2020

being offered in a private placement pursuant to Rule 506(c) under Regulation D of the Securities
Act of 1933, as amended (the “Securities Act”). As a result, the Shares of each Product are
restricted Shares and are subject to a one-year holding period in accordance with Rule 144 under
the Securities Act. In addition, none of the Products currently operates a redemption program.
Because of the one-year holding period and the lack of an ongoing redemption program,
Digital Asset Shares should not be purchased by any investor who is not willing and able to bear the risk of
Investment investment and lack of liquidity for at least one year. No assurances are given that after the one
Report year holding period, there will be any market for the resale of Shares of any Product, or, if there is
such a market, as to the price at such Shares may be sold into such a market.

• POTENTIAL RELIANCE ON THIRD-PARTY MANAGEMENT; CONFLICTS OF INTEREST

Products and their sponsors or managers and advisors may rely on the trading expertise and
experience of third-party sponsors, managers or advisors, the identity of which may not be fully
disclosed to investors. The Products and their sponsors or managers and advisors and agents
may be subject to various conflicts of interest.

• FEES AND EXPENSES

Each Product’s fees and expenses (which may be substantial regardless of any returns on
investment) will offset each Product’s trading profits.

Additional General Disclosures

Investors must have the financial ability, sophistication/experience and willingness to bear the risks of an
investment. This document is intended for those with an in-depth understanding of the high risk nature
of investments in digital assets and these investments may not be suitable for you. This document may
not be distributed in either excerpts or in its entirety beyond its intended audience and the Products and
Grayscale will not be held responsible if this document is used or is distributed beyond its initial recipient
or if it is used for any unintended purpose.

The Products and Grayscale do not: make recommendations to purchase or sell specific securities;
provide investment advisory services; or conduct a general retail business. None of the Products or
Grayscale, its affiliates, nor any of its directors, officers, employees or agents shall have any liability,
howsoever arising, for any error or incompleteness of fact or opinion in it or lack of care in its preparation
or publication, provided that this shall not exclude liability to the extent that this is impermissible under
applicable securities laws.

The logos, graphics, icons, trademarks, service marks and headers for each Product and Grayscale
appearing herein are service marks, trademarks (whether registered or not) and/or trade dress of
Grayscale Investments, LLC. (the “Marks”). All other trademarks, company names, logos, service marks
and/or trade dress mentioned, displayed, cited or otherwise indicated herein (“Third Party Marks”) are
the sole property of their respective owners. The Marks or the Third Party Marks may not be copied,
downloaded, displayed, used as metatags, misused, or otherwise exploited in any manner without the
prior express written permission of the relevant Product and Grayscale or the owner of such Third Party
Mark.

The above summary is not a complete list of the risks and other important disclosures involved in
investing in any Product or digital assets and is subject to the more complete disclosures contained in
each Product’s Offering Documents, which must be reviewed carefully.
©2020 Grayscale Investments, LLC

PLEASE REVIEW IMPORTANT DISCLOSURES & OTHER INFORMATION AT THE END OF THIS REPORT. 19
Q1 | 2020

Digital Asset
Investment
Report

General Inquiries:

info@grayscale.co
Address: 250 Park Ave S 5th floor, New York, NY 10003
Phone: (212) 668-1427
@GrayscaleInvest
©2020 Grayscale Investments, LLC

PLEASE REVIEW IMPORTANT DISCLOSURES & OTHER INFORMATION AT THE END OF THIS REPORT. 20