Recently, Bitcoin (BTC) became one of the most popular assets to invest among institutional investors. This is a crucial change due to the fact that many companies didn’t perceive Bitcoin investments as valuable. There is no doubt that it will bring a number of changes in the perception of digital assets at all. Which investors have invested in Bitcoin in 2020?
Why are institutional investors buying Bitcoin?
For a long time, Bitcoin (BTC) was definitely not a trustworthy investment. People asked on the street about cryptocurrencies were very skeptical and they didn’t have any knowledge about digital assets at all. The fact is that Bitcoin institutional investors can bring a significant increase in cryptocurrency adoption. And the greater the interest in buying Bitcoin, the higher the price of cryptocurrencies at all.
Even If many people are discussing the future of Bitcoin and digital assets at all, financial investors are assumed that with such a growing interest in cryptocurrencies among different societies, holding Bitcoin is less risky than not having crypto assets at all. Another feature that speaks in favor of investing in BTC is that cryptocurrency is uncorrelated with other asset classes. In that case, institutional investors use it as a diversification tool to hedge against highly correlated markets. Blockchain technology in a few fields has an overwhelming predominance above the traditional financial market, like more secure, borderless, and faster transactions, smart contracts, and lower fees.
Who is the largest owner of Bitcoin?
JPMorgan in their research indicates trends that demand crypto assets especially BTC is currently driven by institutional investors, such as family offices and asset managers, who pass into the crypto from gold exchange-traded funds (ETFs). A while back, Forbes released a list of almost 20 institutions, which invested in Grayscale Bitcoin Trust (GBTC) in the first quarter of 2020. Many of them are well-known mutual funds like Ark Invest with 4,5 mld $ in assets under management and Horizon Kinetics managing 5,3 mld $, but surprisingly there were few nevice like Rothschild Investment Corporation.
Where are institutional investors investing?
There is no surprise that institutional investors are looking for long-term investment and taking more complex investments like real estate, infrastructure, hedge funds, ETFs, and many more. Bitcoin is therefore a completely new investment field. Actually, as Bitcoin’s price increases more and more well-known investors admitted to purchase Bitcoin and perceive that as more valuable than gold. For example, the legend of Wall Street Bill Miller revealed that at least 1 Billion $ of two owned came from Bitcoin investment and recommends buying BTC.
Increase in the popularity of the first digital asset also happened when the payment service provider PayPal allowed their clients to buy, sell and hold selected cryptocurrencies. Company president of PayPal, Dan Schulman declared that the transition to digital assets is inevitable due to the huge benefits that cryptocurrencies bring in terms of efficiency, security, and speed.
How Bitcoin institutional investors have an influence on the cryptocurrencies’ prices?
Many people wonder what changes can bring institutions interest in Bitcoin into the crypto market. The main advantage of that situation is an increase in trust in digital currencies. If people see that cryptocurrencies are considered as a trustful and profitable investment, they will be investing more often. Then both the popularity of crypto and its price will increase.
The general adoption of cryptocurrencies is just a matter of time. Like it was already said, not only retail investors are into crypto, but more well known companies are investing and trading. The newest data clearly show the trend that serious and big investors are increasingly moving away from gold and securities for cryptocurrency. This is the future of the global economy that we can not avoid.