Why do so many institutional investors try to invest in bitcoin-centric cryptocurrencies?
There is a list of companies investing in crypto assets (cryptocurrencies). When the most recent fiscal year was examined, it was 16 companies. dealing with cryptocurrencies exchange businesses, game companies, and restaurant operators were named. The total gain on valuation and sale was about 3 billion yen. Bitcoin is volatile in price, and some companies can’t ignore its financial impact. Strict risk management is required.
The hedge fund industry has about 20 trillion dollars in assets under management. On the other hand, the asset management industry, which manages insurance and pension funds, is in orders different from about 1 Kyoto dollar. Financial institutions with such assets under management also began to invest in bitcoin. In this way, there are tremendous changes in the cryptocurrency industry. Asset management companies are entering the market on an unprecedented scale, and the inflow of funds is accelerating.
Buying bitcoin from a large company
A little back in time, in august 2020, we reached a major turning point in the purchase of bitcoin by listed companies in the united states.
- Nasdaq-listed micro strategy bought about $2.63 billion in bitcoin.
- After that, the company purchased an additional bitcoin worth about $1.84 billion in September.
- In addition, in December, they issued corporate bonds to buy bitcoin and bought more bitcoins worth $6.7 billion.The company took a financial strategy to replace 90% of its reserves with bitcoin as an inflation hedge.
- In October, square, a payment company that offers the bitcoin buying and selling app cash app, announced the purchase of 5.3 billion yen worth of bitcoin.
PayPal, which boasts 300 million users, announced the launch of a cryptocurrency-related service. This is believed to have raised the speculation that people will expand the number of buying bitcoins, which has boosted prices. More than 300 million PayPal customers are there worldwide, making it the world’s top smartphone payment market share.
And in December, bitcoin’s rise will accelerate even further. Tesla CEO Elon Musk tweeted about bitcoin. He also announced that tesla will receive bitcoin payments for selling their cars. Then, tesla announced the purchase of bitcoin in February, and bitcoin rose more and more. Musk’s Twitter followers at that time were over 40 million, so the impact is enormous.
Bitcoin ETF approval in the U.S
One of the least important points of bitcoin that we want to hold down is the bitcoin ETF. On 15 October, the U.S. Securities and exchange commission (sec) first approved the bitcoin ETF. It can be said that a historic day has come for cryptocurrencies. On October 19, the sale price amounted to nearly $1 billion. On the second day, assets under management reached $1 billion. It became the fastest fund in history. The fastest fund to date is the gold fund (SPDR gold shares). Trading began in 2004, with assets under management reaching $1 billion in three days. In response to this excitement, breaking an all-time high, Bitcoin rose to over $3.6 million on October 20.
It is said that many institutional investors invested in bitcoin. The money inflow of cryptocurrency funds during the third week of October reached $1.47 billion, the largest since the cryptocurrency research firm coin shares surveyed. Many people think that if bitcoin rises so far, it will not rise anymore.
2 Insurers also go into operation with bitcoin
On December 11, a major change came to herald a new era in the cryptocurrency industry. Mass mutual life insurance co., ltd., a major life insurance company with an asset management value of 30 trillion yen, announced that it will invest $100 million in bitcoin. This is the first time life insurance companies have invested in bitcoin. Therefore, in the investment industry, an epoch-making new era has come.
What happened to bitcoin and why did it rise over $60,000?
Let’s unravel the mystery. Bitcoin’s rise and significant changes may be familiar with the rapid rise in bitcoin in 2021. In 2020, bitcoin was hovering around $10,000, rose significantly after a few days, and exceeded $61,000 in 2021
In the past, bitcoin has fallen so greatly from high to half, and it is natural that some people are worried that it will grab a high price. Bitcoin, also known as digital gold, was bought at the time of inflation, just like gold. In 2020, prominent investors Druckenmiller and Michael Novogratz bought bitcoin to hedge inflation to replace gold, which attracted investors.Entry of companies and asset management is an easy-to-understand explanation of why bitcoin soared so high. If you want a platform where you can get all the help with market understanding to investment strategies,you can visit, Bitcoin Era.