Institutional Investment In Bitcoin Is On The Rise

December 17, 2020 11:45 AM
Crypto Story of the Day

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CRYPTO MOVERS AND PRICES

 

Two Sentence Summary: Bitcoin (BTC) has rocketed beyond all-time highs and is now trading on either side of USD 23,000. Select alt-coins have been seeing their own aggressive moves with Ripple (XRP) and Litecoin (LTC) both up over +15%.

Crypto Story of the Day

Bitcoin (BTC) has decisively broken above 20,000. Contrasting to 2017, a narrative of institutional investment has been closely associated with the price action since at least August.

The 2017 rise was largely characterized as a retail-driven rally that was never able to see sizable investments from traditional financial institutions. This time, however, a trail of incremental interest in varying forms of institutional adoption has tracked price beyond all-time highs. 

In May, with BTC trading slightly under USD 10,000 hedge fund manager Paul Tudor Jones emerged as the first in a wave of high-profile investors revealing positions in the asset. In August, MicroStrategy revealed it was considering BTC for its treasury and would go on to build a mandate to accumulate over USD 1 billion in BTC. In October, PayPal rolled out its BTC and ETH service for selling, holding, and buying. At the end of October, Guggenheim Funds Trust filed documents with the SEC indicating an intention to invest in BTC. 

Last week, MassMutual, which manages about USD 235 billion, revealed a USD 100 million placement in BTC. During this period, the Grayscale Bitcoin Trust (GBTC) saw steady inflows of capital, reaching USD 11.5 billion Alexium (AUM), or about 522,727 BTC. 

BTC’s breakout comes on the back of an unprecedented series of endorsements. The idea of BTC exposure, as an investment, not being taken seriously appears to be a thing of the past. Having said that, the firms that have invested so far remain in the “trailblazer” category.

We continue to argue that more efficient exposure vehicles, such as a broad suite of regulated fiat-settled derivatives, will continue to attract these players. While the ball appears to be in motion for institutional investment, this is only scratching the surface.

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About the Author

FRNT Financial is a technology and sales layer that offers institutional and accredited investors access to various forms of exposure to crypto-assets. You can subscribe to FRNT Financial Morning Note at https://www.frnt.io/morningnote