The cryptocurrency space has been on the rise in the mainstream as regulations, governments, and traditional institutions have come to normalize and legitimize much of the space.
This year the planet has faced a worldwide pandemic, and therefore the traditional markets and economies around the planet had to undertake and affect this unprecedented event. It’s also been a year that appears set for greater interest in cryptocurrency investment.
The cryptocurrency battlefield is getting increasingly crowded. This space is witnessing an increasing amount of attention being cast from multiple institutional investors.
According to Evertas survey, institutional investors plan to significantly increase their stakes in Bitcoin (BTC) and other digital assets in the future.
New research amongst institutional investors who collectively help manage USD78.4 billion of assets, reveals that over the next five years 26 per cent believe pension funds, insurers, family offices and sovereign wealth funds will ‘dramatically’ increase their level of investment in cryptocurrencies
Prominent Institutional Investors Profited in 2020
Grayscale Bitcoin Trust
Grayscale Investments is, perhaps, an unsurprising pacesetter in this regard. Through its Bitcoin fund (GBTC), which owns and tracks the worth of bitcoin, the New York-based firm now holds 449,596 BTC, valued at $5.1 billion currently, and representing 2.14% of the digital asset’s total circulating supply.
According to the sources of Securities and Exchange Commission, GBTC held around $1.9 billion worth of Bitcoin at the end of 2019. By June 30, 2020, its portfolio had ballooned to $3.5 billion.
Since then BTC price surged 25%, inflating the value of GBTC’s crypto even further. The total investment into Grayscale’s products was $2.7 billion over the 12-month period ending Sept. 30, Using today’s prices, GBTC sits on almost $4.5 billion worth of Bitcoin.
Listed on the OTCQX market, the Trust has snapped up 70% of all newly minted bitcoin in 2020, almost doubling its portfolio within the process.
Grayscale’s bitcoin trust “became the primary publicly quoted securities solely invested in, and deriving value from, the worth of bitcoin”
The corporation operates ten crypto investment products focused on institutional investors. Funds cover ethereum (ETH), bitcoin cash (BCH), zcash, XRP, and more.
Grayscale could also be a pioneer, but it’s Microstrategy that’s grabbed all the headlines in recent weeks. The Nasdaq-listed company, which develops mobile software also as providing cloud-based services, bought $425 million worth of bitcoin in August and September, making BTC Microstrategy’s main reserve asset.
Initially, MicroStrategy purchased 21,454 BTC in August for $250 million. Following the initial investment, the firm bought an additional 16,796 Bitcoin for $175 million. Though the company added digital assets to its quarterly financial report for the first time in Q3 2020, it also reported a $14.2 million net loss in income from its business operations.
With Bitcoin’s rises past $13,700, the company’s BTC holdings are currently worth more than $525M.
According to crypto researcher Kevin Rooke, MicroStrategy has earned more from its Bitcoin (BTC) investment than it did through its actual business for the last three years, from Q1 2017 to Q2 2020.
“Our recent decision to make Bitcoin our primary treasury reserve asset is the latest example of MicroStrategy’s embrace of virtual technologies,” said CEO Michael Saylor regarding the firm’s most recent quarterly report. “The purchase of $425 million of Bitcoin during the quarter offers the possibility of greater return potential for investors than holding such balances in cash and has increased the overall visibility of MicroStrategy in the market.”
Corporate adoption might not be considered a trend just yet, but news that Jack Dorsey’s Square Inc. moved one-hundredth of its total assets into bitcoin suggests something could also be built up.
The firm managed to earn $875 million revenue for the second quarter this year, which resulted in a jump of 711% of its Bitcoin gross profit for the same period.
On Oct. 8, the NY Stock Exchange-listed mobile payments firm announced it spent $50 million buying 4,709 bitcoin.
Amrita Ahuja, chief treasurer of Square, claimed “bitcoin has the potential to be a more ubiquitous currency within the future”.
On this account, the corporation intends that
“As it (bitcoin) grows in adoption, we shall learn and participate in a disciplined way. For a corporation that’s building products supporting a more inclusive future, this investment may be a tread on that journey.”
Bitcoin reacted positively to Square’s news, soaring 8% to quite $11,300 from $10,500. With a market capitalization of over $83 billion.
Influencer’s View on Institutional investors
Recently, Paul Tudor Jones praised Bitcoin for its potential as a speculative asset, stating he invests a small percentage of his portfolio in the coin, but expects it to be the best performer.
VP of Huobi Global Markets, Ciara Sun,
“Huobi has seen an influx of traditional and institutional traders join our platform and take advantage of the Huobi Futures market place. As of May 6, Futures and Swap Trading Volume at Huobi topped $5.2 billion, with 24-hour perpetual swap trading volume hitting $2.2 billion — this is off a product that was only launched in April.”
According to Huobi, what is most interesting to see is that the Institution trading percentage on Huobi futures is estimated to be as high as 30 to 40 percent.
The trend seems to suggest that more institutional clients are getting comfortable investing in the new asset class. Coinbase noted that :
“Greater visibility of reputable investors warming up to digital assets” is also sending a positive signal for other investors as it could help inspire “confidence among this community.”
For example, the hedge fund Tudor Investment Corporation disclosed in May that it took positions in Bitcoin (BTC). The announcement also coincided with reports that came out at that time saying the hedge fund’s CEO Paul Tudor Jones argued BTC to be a better hedge against inflation.