Institutionalization was awaited for a long time by investors in the Bitcoin (BTC) and crypto area and now it seems to be there. What is meant by this is that institutional investors such as hedge funds invest large sums in BTC in order to profit from the performance.
For a long time this seemed to be rather wishful thinking of many BTC fans, because the Bull Run 2017 was almost exclusively caused by private investors. However, with the development of the crypto sector in the last 3 years a lot has happened.
Especially in the last weeks and months the corona crisis as well as the massive money printing of the central banks around the globe has become a catalyst for this development. The best example of this is the recent BTC News, about the well-known Wall Street hedge fund manager Paul Tudor Jones who invested 1-2% of his fund’s capital in BTC through futures. Also recent figures from Grayscale Bitcoin Trust showed that BTC seems to have become the darling of investors.
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BTC becomes accessible through Grayscale Trust
One of the main problems of the long-awaited institutionalization was that the nature of BTC and the crypto-regulation made it difficult for most professional investors to invest in Bitcoin.
Grayscale was one of the first companies to take up this challenge and set up the Grayscale Bitcoin Trust in 2013, where investors can buy shares in securities. Grayscale will then use the money to invest in BTC, allowing investors to participate in the performance of the company through a traditional financial instrument. This possibility seems to appeal to many institutional investors.
BTC on the advance through Grayscale
Grayscale now manages assets of $3.2 billion through its BTC Trust, which represents almost 2% of BTC’s total market capitalization. In recent years, the sums that institutional investors have invested quarterly have already multiplied.
Recent figures showed that the corona crisis and the money printing by the central banks have fuelled this development massively and steered many investors into the arms of BTC Trust. That is because in the first quarter of 2020 an average of $30 million was invested weekly, which is an extrapolated figure of over $360 million in the last 3 months and a new record.
Within one year, the average weekly investment volume has thus increased tenfold and, according to the statements of CEO Barry Silbert, the rapid development will continue in the second quarter of 2020.
What does this mean for the BTC course?
Many BTC fans see the institutionalization as a decisive driver for the development of the crypto sector and also for a positive increase in the value of the Bitcoin course in the coming years. It is particularly interesting to note that institutional investors generally invest large sums of money from the perspective of private investors.
That is an interesting development, especially considering the fact that, as BTC’s market capitalization increases, more and more capital is required to drive the share price upwards.
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First published in CRYPTO MONDAY, a third-party contributor translated and adapted the article from the original. In case of discrepancy, the original will prevail.
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