The crypto space is filled with joy whenever an Institution or a market bull announces his/their bitcoin holdings.
The institutions or the individual investors might have converted their cash reserves well before they announce on social media.
In recent days, the crypto space has witnessed numerous acquisitions from big companies. The followers and traders expecting a major breakout rejoiced the moment. But the question that arises here is, why do institutions acquire bitcoins at blooming prices?
Why not when the prices are slashed? Did the company’s analysts not analyse the Bitcoin prices previously?
However, as per a crypto analyst CryptoWhale, the institutions show off their tiny positions just to create hype and to attract the retail investors. The analyst further said that Wall Street is using this strategy for decades and it works every time.
Hence can we say that the institutions silently hold bitcoins and announce at a specific time aiming a specific bitcoin movement?
Are Bitcoins in Safe Heavens With These Investors?
Most of the investors who do not belong to the crypto space jumped to acquire Bitcoins as they felt it as a ‘Safe heavens’ asset. The crashing position of the US dollar led them to search for another asset which could safeguard their funds.
Distantly, J.P.Morgan has released Quarter3 earning’s reports. This report is however not directly linked to Bitcoin and its price, but the report’s takeaways can play a vital role. Basically, the report showcased a profit of 4 percent compared to the previous year and the other pre & post-pandemic situation.
However, the prime focus was the key takeaways from the report that could impact bitcoin. They are,
- The amount of loan defaulters has reduced from $10.47 billion in Q2 to $611 million in Q3 which signifies economic recovery
- With the pandemic impact, the US government announced a $2 trillion stimulus package and recently also announced the second round of the package. This could aid in improving the economic downturn.
- JP Morgan CEO Jamie Dimon also warned that it had $34 billion to secure itself from losses, but if the stimulus is delayed more and the situation persists, then, it would require additional $20 billion.
The above findings, however, do not relate directly to the bitcoin movements, but the impacts would do so. The economic recovery and second phase of the stimulus package might be the indicators for the strengthening dollar position.
Moreover, if JP Morgan required additional funds, the possibility of the big institutional investors dumping assets to generate cash would increase.
The same can be expected with Bitcoin, as the investors once did in the month of March 2020, when bitcoin slashed to the record levels below $4000.
Collectively, the institutional investors are speculated to hold bitcoins well before they announce just to create a hype and in-turn giving a push to the bitcoin price. However, as long as Bitcoin stands in a strong position above record levels, it is a good thing happening in the crypto space.