Home » $2BILLION WORTH OF BITCOIN PURCHASED BY INSTITUTIONAL MANAGERS IN OCTOBER

$2BILLION WORTH OF BITCOIN PURCHASED BY INSTITUTIONAL MANAGERS IN OCTOBER

by admin

October was tagged Uptober because of the price surge in bitcoin and other cryptocurrencies, but what the analysts and traders didn’t see coming – if they had any powers to correctly predict the future – is seeing so many institutional managers buy billions worth of bitcoin in one month. October was a win-win for cryptocurrencies because of the series of positive news that filled the cryptocurrency space, and the price increases in cryptocurrencies, which set off the trend for all-time highs in most coins. From bitcoin to Ethereum to Cardano to Shiba Inu, traders and investors, on exchanges such as redot.com, saw massive spikes in prices of most coins, leading to lots of profit being made, and lots of big money players buying different coins.

Bitcoin is seen as a store of value currency, something like what Gold is. So, it was not such daring news when rumours filled the crypto market space that institutional managers were taking keener interest in bitcoin, and some, in Ethereum and other cryptocurrencies.

WHY ARE INSTITUTIONAL MANAGERS BUYING SO MANY BITCOINS?

The world of cryptocurrency has been viewed with a lot of scepticism. For a long time. The traditional financial systems have been wary of the threats that bitcoin poses to the traditional systems, with most fearing that bitcoin will cause people to lose their money.

“A fool’s errand,” many institutional managers sniggered at bitcoin in its earliest days. The belief was that cryptocurrency would fade off as many other digital currencies before it. But the institutions and doubters didn’t take into cognizance the power of decentralized powers.

After years of playing down bitcoin’s importance to the financial world, and the general economics of the world, the big institutions – banks, asset managers, etc – are finally dipping their toes into the bitcoin waters.

Are they testing their right toes or they’re going all-in?

October showed that they are taking the plunge with bitcoin and crypto, and they are taking it big!

The news of the United States Securities and Exchange Commission approving bitcoin ETFs sparked wild celebrations in the market. Prices of bitcoin and Ethereum, as expected, went up some percentages.

And it was good. The SEC kept to their words, approving two Bitcoin Futures Exchange Traded Funds.

As the news spread in the crypto market space, institutions knew that the walls that separated bitcoin, and in general cryptocurrency, from the traditional financial institutions were breaking; and it was breaking faster than many had expected.

For a technology not even two decades old, the adoption of bitcoin and blockchain technology is fast, faster than how people received the internet or any new form of technology.

With the approval of these two ETFs by the SEC, institutional managers, seeking to hedge some of their funds against a market crash and inflation, bought bitcoins.

Now, you may be asking, “but bitcoin prices are volatile, what stupid decision are these institutional managers taking?”

The answer is simple:

They perceive – quite rightly if we’re being truthful – that bitcoin will become the currencies of the world, in the same the United States Dollar is the world’s currencies. Blockchain technology is opening new horizons for innovation and development in the tech space, so, it is only common sense that institutional managers protect their assets with bitcoin.

Also, the covid-19 pandemic and the subsequent movement restrictions and lockdowns in most countries opened the eyes of the world to the inconsistencies of fiat currency. And hey, we mustn’t forget the level of distrust many have with fiat currency and centralized governments.

As the world continues to accept bitcoin and cryptocurrencies, with some countries planning on following the steps that El Salvador took, institutions and other big-money players will have no other reason other than to take cryptocurrency seriously.

 

HOW MUCH HAVE INSTITUTIONS BEEN BUYING BITCOIN?

The demand for bitcoin by institutions is not new. Many big companies such as Amazon have been toying with the idea of having native tokens that customers can use on the platform. Payment giants, Mastercard, only recently implemented a loyalty program that rewards loyal customers with cryptocurrencies, currencies they can also spend with registered Mastercard merchants in the United States.

However, the recent buys by institutions are one of the biggest so far. While bitcoin had a $2 billion inflow from these big-money players, $1.05 billion worth of Ethereum was bought. These buys, which, at the time of this writing, was about $7 billion beat the record of the amount institutions spent on buying bitcoin. This year alone, about $8.9 billion have flowed into the cryptocurrency space, on exchanges such as Redot, surpassing last year’s purchases by these institutions by 30%.

 

WHAT EFFECTS DO THESE BUYINGS HAVE ON THE MARKET?

Institutions accepting that bitcoin is a legitimate store of value is highly beneficial to the cryptocurrency market because it opens the space up for more adoption, acceptance by nations as a legitimate exchange of value, a currency and more financial opportunities for many.

Let me explain each of these points raised.

  1. MORE ADOPTION: The scepticism that once clouded the minds of big-money players, these big institutions, is fading away. And as they accept that bitcoin is a great store of value, they attract more big investors and their institutional friends who were unsure of bitcoin and cryptocurrency. It is like a man who was not sure if he wanted apples for his sore throat. Then he sees his friend, the one who’d been as sick as he was, with whom he had discussed how dangerous apples might be, eating apples with pride and gusto. This man was surprised that his close pal had betrayed their friendship bond when he bought that ‘dangerous’ apple.

But the more this friend who was eating something dangerous, the better his throat became. In one week, the friend eating the dangerous fruit is well, can speak well and feels no itchiness in his throat, and the man (the main man in this story) will go buy an apple and start eating.

If more institutional managers buy bitcoin and get very involved in blockchain technology and cryptocurrencies, more doubters will trust the credibility of cryptocurrencies. As they trust cryptocurrencies, the more they buy, hold and trade, the more adoption cryptocurrencies get.

  1. Accepted by Nations as a legitimate currency: The frequency with which big financial institutions buy bitcoin and invest in other cryptocurrencies increases how acceptable the idea of bitcoin as currency becomes in countries. See, the United States is the leading country financially. If big financial institutions adopt bitcoin as an investment vehicle, it sends a clear message that bitcoin is safe as a store of value, and soon as a medium of value exchange.

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