Who’s Buying Up Crypto in the Mainstream Markets?

16 Oct, 2020

We’ve been reading a lot lately about how much of Bitcoin and Ethereum is locked up or hasn’t moved in months, even years.  And with the move of BTC’s price above the $11,000 USD range, it’s no surprise that crypto fans are hanging on tight to their coins.  But they’re not the only ones who are heavily invested in cryptocurrencies.  There’s another group of buyers who may surprise you:  publicly traded companies.  In fact, a recent report by bitcointreasuries.org tells us that 18 companies hold more than 600,000 BTC or nearly 3% of the coin’s total supply.

What’s the buzz here? Let’s take a look at some recent purchases of BTC.

Square, Inc.  Square, the publicly traded digital payment company which accepts Bitcoin transactions, surprised the traditional markets with its recent purchase of $50 Million BTC.  The buy, which represented about 4,709 BTC, represents about 1% of the company’s total assets in 2Q 2020.

“We believe that bitcoin has the potential to be a more ubiquitous currency in the future,” said Square’s Chief Financial Officer, Amrita Ahuja at the time of the announcement. “As it grows in adoption, we intend to learn and participate in a disciplined way. For a company that is building products based on a more inclusive future, this investment is a step on that journey.”

MicroStrategy, Inc. The news of Square’s purchase came on the heels of another publicly traded company’s BTC purchase MicroStrategy, which purchased more than 21,450 BTC this summer, announced bought an additional 16,796 BTC in September. The company, which is listed on the US NASDAQ exchange, is the “largest independent publicly-traded business intelligence company,” announced the purchase in November.  What’s even more intriguing is the decision to make Bitcoin the “principal holding in its treasury reserve strategy.”

“This investment reflects our belief that Bitcoin, as the world’s most widely-adopted cryptocurrency, is a dependable store of value and an attractive investment asset with more long-term appreciation potential than holding cash,”  CEO Michael J. Saylor said.  “Since its inception over a decade ago, Bitcoin has emerged as a significant addition to the global financial system, with characteristics that are useful to both individuals and institutions. MicroStrategy has recognized Bitcoin as a legitimate investment asset that can be superior to cash and accordingly has made Bitcoin the principal holding in its treasury reserve strategy.”

These two transactions coincided with another indicator that interest in digital currency is growing stronger. Grayscale, which calls itself the “world’s largest digital currency asset manager,” just announced it had raised a whopping $1.05 billion in Q3, making it the “largest capital inflow in a single quarter in the firm’s history.” The year-to-date total of $2.4 billion, in investments is more than double of what it took in since 2013.

While the firm’s Greyscale Bitcoin Trust accounted for more than $700 million for the quarter, representing 31% of the inflow, other funds were also seeing increased activity. “Among alternative products, the most notable increase in appetite has emerged for Grayscale® Bitcoin Cash Trust, Grayscale® Litecoin Trust, and Grayscale® Digital Large Cap Fund.” The firm stated. “On average, the aforementioned products saw inflows increase by more than 1,400% quarter-over-quarter.”

Needless to say, these recent purchases and announcements are signaling momentum toward mass adoption of crypto.  Analysts at JP Morgan called the purchase by Square a “strong vote of confidence” in digital currencies. Fidelity Digital Investments noted its research showed that more than 60% of investors believe digital assets have a place in a portfolio.

What happens next?  Will other companies follow by adding crypto to their asset portfolios?

Will more companies follow the lead of Square and MicroStrategy? Gemini’s CEO Tyler Winklevoss thinks so. “Tomorrow, it will be another visionary leader, and another, and another…the tsunami is coming.”

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