No wonder top institutions from all across the globe are investing in Bitcoin. The likes of MicroStrategy, Tesla, BlackRock, and Circle, among others, affirm and confirm their stance that Bitcoin’s worth as a digital gold is beyond speculation. Talking of banks and financial institutions – Goldman Sachs, Barclays, JP Morgan, and many more have Bitcoin as a part of their coveted portfolio. Even Warren Buffet’s (who once called Bitcoin rat poison, squared) digital neobank Nubank has $1 billion worth of its treasury vested in Bitcoin in 2022.
These developments are a testimony that Bitcoin is not some new-age phenomenon; the movement is real and here to stay. Despite the volatile nature of the market, Bitcoin has managed to establish itself as a valuable investment opportunity for some of the most powerful corporations and institutions.
There’s a reason why these institutions and corporations remain bullish on Bitcoin. They see a huge opportunity in Bitcoin and the crypto market as a new market segment and don’t want to miss it. Bitcoin is considered a hedge against inflation as its price movements aren’t a function of monetary policies or the financial state of any particular economy. The magnanimous rise of cryptocurrencies during the pandemic and their use in the Russo-Ukrainian war proves the case.
More and more institutions now want to have crypto experts as employees on their payroll. For instance, a 250% increase was seen in the number of crypto-focused roles across the Wall Street companies. Bitcoin is also said to be less correlated to traditional stocks and can be a good hedge investment to diversify risks. However, its correlation with stocks is on the rise. For individuals, institutional adoption is the obvious route toward legitimization and, subsequently, the development of a regulatory framework around cryptos. With legitimization, Bitcoin, as well as other cryptos, can rise to match the stature of stocks and commodities that banks have always invested in. Bitcoin’s worth and adoption will grow if we see larger stakeholders entering the crypto market.
Source: Fox Business | One of the richest Bitcoin wallets- Tesla recently sold 75% of its Bitcoin holdings but aims to acquire them back in the near future
Since its CEO can always be found at the top of all lists and headlines, let’s start with Tesla. The automotive and clean energy company got involved in Bitcoin in December 2020. It has a reported $1.5 billion invested in Bitcoin. Elon Musk has been vocal in his support of cryptocurrency, which justifies the company’s huge holdings of Bitcoin. His relationship with the digital asset has been a bit rocky, especially since a one-off effort to increase Bitcoin adoption by accepting the cryptocurrency as a means of payment was put on hold due to environmental reasons. In 2022, Tesla reportedly sold “approximately 75%” of its Bitcoin holdings. This is a massive cleanse that still leaves the company with around 10,725 BTC locked away in its digital vault.
While Tesla might be the company making the most noise when it comes to Bitcoin, MicroStrategy has been the torchbearer for companies investing in Bitcoin back in 2020. The business analytics platform went on a Bitcoin buying spree in 2021 and 2022. It raked up 129,699 BTC as of July 2022. If buying Bitcoin was an addiction, CEO Michael Saylor would have been in desperate need of rehabilitation. He was allegedly buying $1000 worth of Bitcoin every second!
The rise of crypto has also seen a rise in crypto brokerages, crypto trading platforms, and everything in between. These companies have a vested interest in the performance of cryptocurrencies. The fact that they have large BTC holdings comes as no surprise. One such coveted name is Galaxy Digital Holdings, a crypto-focused merchant bank that holds 16,400 BTC as of 2022. The investment is currently worth around $357 million.
This year, Michael Novogratz, the CEO of Galaxy, has stressed the fact that “Bitcoin is not going away as a macro asset” even after the plummet in prices and the volatility in the markets as of late. The company has all its operations centred around crypto. It might be safe to assume that they know a thing or two about this. And, their Bitcoin investments are not merely shots in the dark.
Crypto mining companies are in the thick of it all. They are responsible for securing the blockchain networks and processing every transaction, meaning that they have a ton of knowledge about the intricacies of the blockchain system. Marathon Digital Holdings is one such company that operates in North America and aims to make crypto mining energy efficient. They have 10,055 BTC in their holdings, and they show no signs of stopping. With hundreds of thousands of Bitcoin miners at their disposal, they can continue to grow their holdings. Canadian crypto mining firm, Hut 8 Mining Corp is another such institution whose love for crypto and Bitcoin seeps into their own company portfolios. They hold 7,406 BTC, which is worth around $161 million.
We cannot talk about financial investments without talking about banks. Crypto is a market currently worth upwards of $1 trillion (though it peaked at $3 trillion last year. Yikes! volatility), making it evident why banking institutions are not far behind in the race to acquire some valued BTC. Morgan Stanley tops this list of banks, having put nearly $1.1 billion into crypto. While the exact figure of their BTC holdings is unclear, reports have suggested that the bank might be well on its way to becoming one of the biggest Bitcoin holders in the next couple of years. Goldman Sachs is another big-time bank that has expressed public interest in Bitcoin and its growing dominance in recent years. Reports suggest that they have invested $698 million into the crypto space, a number that is bound to grow. While these may be the top few, there are countless other banks looking into crypto investments as part of their portfolios.
Founders and CEOs like the ones we talked about are growing increasingly interested in crypto, which directly translates into their companies becoming major players in the Bitcoin game. The term used for these investors that have the power to influence the entire market with their large-scale transactions is ‘crypto whales.’ Now that we’ve looked back at the firms that are already knee-deep in crypto’s decentralized waters, let’s look toward the future. The institutionalization of Bitcoin is evident and imminent. While some organizations wait for the legislations to be put in place, others are making bold moves early on, which will undoubtedly inform governmental response. A set of universal regulations overlooking the crypto sector would not only ensure investor protection but would also bring in greater adoption. At the macro level, the world will be ready to embrace a new way of exchanging value culminating in greater financial freedom.