There has been a growing interest in Ethereum from institutional investors in the recent past. Current data now show that Buy Bitcoin with Debit Card (BTC) has also moved into the focus of investors. In particular, the recently implemented halving gave the whole thing a boost. For example, the famous Bitcoin Trust from asset manager Grayscale is more popular than ever before. The first experts even expect a “perfect storm” on the crypto market.
Increasing Interest in Bitcoin and Ethereum
Institutional investors are investing in cryptocurrencies to a much greater extent than one might expect. Although cryptocurrencies naturally do not correspond to the assets favored by banks and financial service providers, data show a growing interest. In addition to regulated investment objects such as bonds or stocks, more and more cryptocurrencies are ending up in institutional investors’ custody. Bitcoin trusts (mutual funds), in particular, seem to be a popular investment object.
The GBTC (Grayscale Bitcoin Trust) of the asset manager Grayscale has emerged as one of the leading trusts. The company, founded by Barry Silbert, specializes in managing investment funds based on digital currencies. The great interest shown by wealthy investors is particularly evident in the headlines of the past few months. For example, an analysis found that Grayscale acquired around half of all ETH mined this year to cover its Ethereum Trust. And this story seems to repeat itself because a similar procedure can now be observed in the case of the even more popular Bitcoin Trust.
In the past three months, Grayscale secured around 33 percent of the Bitcoin mined. Between February 7, 2020, and May 17, 2020, the American wealth manager added 60,762 BTC to its Bitcoin fund. In the phase before the halving, in particular, the company acquired new coins on a large scale – an average of 607 BTC per day. To serve its institutional customers, Grayscale secured almost 35 percent of the mentioned BTC in the 17 days before the halving alone. In total, Grayscale currently manages 343,954 BTC, an increase of 21 percent over the past 100 days.
Is A “Perfect Storm” Coming?
The entry of banks and credit institutions is of great importance for the crypto market’s long-term success. While private individuals and, in some cases, companies have been investing in cryptocurrencies for some time, institutional investors have held back. However, the current interest illustrates once again the volume that institutional investors can flush into the market. Because one of the preeminent fund managers for this type of investor, Grayscale expects to increase its Bitcoin portfolio to around 550,000 BTC by March 2021. This is the only way to continue serving the run on his trusts. To do this, Grayscale would have to acquire almost 75 percent of all coins mined during this period.
But the interest of institutional investors is not only evident from the example of American asset management for cryptocurrencies. The reports from rental platforms for Bitcoin, Ether, and Co also indicate an increasing customer base. Alex Mashinsky, CEO of crypto lender Celsius, states that around 260 institutional customers are currently using his company’s offers. Zac Prince from Celsius competitor BlockFi also reports growing interest from major customers. He justifies this with the high volatility of digital currencies compared to traditional investment objects.
In the course of the Corona crisis, the classic financial sector has only recovered slowly to this day. The crypto market, on the other hand, showed a significant recovery within a few weeks. Some digital currencies are now even performing better than they were before the crisis. Many analysts expect the millions and billions that banks wash into the market that a “perfect storm” could develop. The long-term investment of institutional investors in trusts and futures could significantly increase the price of many cryptocurrencies. Matt D’Souza, a large Bitcoin fund manager, expects a massive price increase in the next 12 to 18 months.
Who Owns the Most Bitcoin?
Probably by far, the wealthiest Bitcoin owner is on everyone’s lips. It is the inventor of currency and blockchain technology: Satoshi Nakamoto. But who is behind the pseudonym is still unclear. His fortune is estimated at around 1.1 million Bitcoin or 6.2 billion euros. However, this value is also estimated, since Nakamoto did not use a single address in the early days. One thing is sure: The Bitcoin inventor never touched most of his currency, exchanged it for other currencies, or used it in any other way.
The interest of banks, financial service providers, and lenders in cryptocurrencies continues to grow. One of the preeminent corporations in this field, the American asset manager Grayscale, is acquiring Bitcoin and Ether on a large scale to meet demand. The company’s investment funds, which are aimed at institutional investors, are more popular than ever before.
This is a positive sign for the entire market. While institutional investors naturally rely on regulated assets, they seem to increase, including cryptocurrencies in their portfolios. One reason could be the excellent performance of digital currencies in times of crisis. While the traditional financial market is still struggling with the Corona crisis, the crypto market has recovered almost completely.