In the past year, Bitcoin has seen prices below $ 5,000 and over $ 20,000. One of the main factors affecting Bitcoin’s rebound following the fall of the crypto market in March 2020 was the increasing presence of institutional investors in the cryptocurrency market. As central banks worldwide supported aggressive stimulus measures (i.e., accelerated money printing) to offset the negative impact due to the economic impact of the pandemic COVID-19, investors have started to convert their money into other assets to protect their holdings from depreciation.
One of the big beneficiaries of this trend is Bitcoin, which was empowered in December 2017 by a flock of institutional players who have invested hundreds of millions of dollars in BTC. For large investment companies, institutions, and retailers, the global cryptocurrency market does not have enough liquidity to process orders to buy and sell millions of dollars. The primary digital asset trading platforms can liquidate large amounts of orders, but this can significantly impact short-term cryptocurrency price movements.
MicroStrategy is a business intelligence company that has managed to break out of relative obscurity through a very bold bet on Bitcoin. On August 11, 2020, the company announced that they had started making Bitcoin a significant reserve asset. MicroStrategy bought $250 million worth of Bitcoin in its first purchase, but the company has bought more since then, spending a total of $ 1.12 billion. At the time of writing, MicroStrategy owns 70,470 BTC or about 0.37% of all bitcoins in existence.
Michael Sailor, CEO of MicroStrategy, has suddenly become one of the most outspoken proponents of bitcoin, arguing that the world’s largest cryptocurrency is the best way for companies and investors to maintain its value. According to Saylor, MicroStrategy realized that their cash value was rapidly eroding and prompted companies to consider alternatives.
The world’s largest cryptocurrency manager, Grayscale, has taken the lion’s share of the case with 78% (or $ 336 million). With the last injection, the total assets under management of Grayscale increased by $ 12 billion north. In 2020 alone, the company recorded an inflow of $4.3 billion.
Somewhat to expect, Bitcoin-focused funds have the lion’s share of these funds. Each week, such funds attract nearly $335 million. As such, total inflows have increased to $ 4 billion since early 2020.
According to their most recent report, $5.7 billion was invested in bitcoin last year, a massive jump from $608 million in 2019, double the $360 million in 2018.
An indication of institutional investor interest in Bitcoin is parabolic. Only accredited investors can make Bitcoin shares with net asset value publicly traded after six months of exposure to the OTC market.
The Square went early for the crypto feast. Jack Dorsey, the CEO above, is listed as a strong defender of bitcoin in 2018. It plans to purchase $ 1.5 billion worth of Bitcoin by 2020 to facilitate its use in the Square ecosystem. Dorsey got it right, and Square’s shareholders were spectacular beneficiaries.
For $50 million, the company earned a total of 4,709 coins valued at $160 million. Additionally, Square’s stock value rose 18.5% from its value on October 8 to $217 at the end of the year.
Square company shares are up 245% in 2020 despite COVID-19 destroying small businesses, its main constituent, and shutting down the economy. Investors see Square as a crypto game.
The US Financial Crime Network Authority has no interest in Square’s shareholders. FinCEN wants the company to keep detailed records of its Bitcoin transactions.
Ruffer is regulated by the FCA Investment Manager with more than 6,600 clients worldwide. In December 2020, the company announced it was distributing bitcoin and described the decision as a “defensive move.” Specifically, the company says it makes Bitcoin distribution while some of its assets get diverted from gold.
The recent inclusion by one of the specially appointed managers for the Ruffer Fund for Multi-Strategies was Bitcoin. This was largely a defensive step taken in November after the company reduced its gold exposure.
Shortly after the company announced it was distributing bitcoin, a Ruffer spokesperson said that its exposure to bitcoin was around $740 million. Ruffer’s $740 million investment news may have helped Bitcoin break new records when BTC hit a magical $ 20,000 the same day.
CoinShares is an asset management company that offers exposure to cryptocurrencies through a variety of investment instruments. Bitcoin Tracker One and Bitcoin Tracker Euro are exchange-traded products that track Bitcoin’s effectiveness and are accessible on the Nasdaq Stockholm Exchange. According to a tracker created by analyst Kevin Rook, CoinShares held 65,810 BTC as of September 31, 2020.
One River Digital Asset Management
One River Digital Asset Management is a hedge fund that bought Bitcoin and Ethereum for $600 million in 2020 and plans to increase its holdings to $1 billion in early 2021. The fund led by Eric Peters is also supported by billionaire Alan Howard, who bought a stake in the company and invested in one of its funds.
Peters said that he expected a generational distribution for the cryptocurrency asset class and was initially interested in cryptos because they can protect against inflation and currency devaluation.
When institutional investors buy large amounts of Bitcoin, it is bound to have a real impact on the cryptocurrency exchange market and the development of significant digital assets’ prices.
However, in the past two months, the cryptocurrency market has stabilized and is struggling to initiate a sizable upward movement.
With Circle, Coinbase, and other major financial institutions that have launched crypto-focused custody solutions in the market or looking to offer crypto custody in the short term, an increasing number of institutional investors are looking to incorporate cryptos.
According to a most recent report, $6.7 billion was invested in bitcoin last year, a massive jump from $608 million in 2019, double the $360 million in 2018.