Why Institutions Care About Bitcoin
With big players entering the crypto space, more institutions have also shown their interest in Bitcoin. Today, large institutions are also mega HODLers. Bitcoin is undoubtedly a popular asset that institutional investors want to own. As of 2020’s second quarter, up to 36% of 800 institutional investors owned crypto assets, according to a survey. What’s, some hedge funds have reported their plans to increase crypto holdings. Up to 90% of all institutional crypto asset holders plan to invest more in Bitcoin.
From Grayscale and Microsoft to Goldman Sachs and JPMorgan, Bitcoin has now solidified a space within investment portfolios. Many investors see this cryptocurrency as an asset they should hold to hedge against currency devaluation and inflation. But beyond this, institutional investors have technical reasons to be bullish on this virtual currency. Some have even predicted that this virtual currency will hit the $1 million mark by 2025.
Platforms like Bitcoin Evolution are experiencing an increase in the number of institutions that want to use them to purchase or trade this cryptocurrency. Such crypto exchanges allow people and institutions to trade or invest in this virtual currency with ease. Perhaps, you can visit Bitcoin Evolution App to start trading or investing in this digital currency.
While Bitcoin’s future will remain a debatable topic, the truth is that more financial institutions and investors believe that holding onto this cryptocurrency is less risky than not investing in it. But, what has prompted more institutional investors to consider Bitcoin?
Blockchain Technology and Borderless Network
Bitcoin is a non-sovereign currency. It’s uncorrelated with most asset classes. Most institutional investors see Bitcoin as a diversification tool that can help them hedge against correlated markets like the dollar and Nasdaq. Blockchain technology and Bitcoin offer maximum value to institutional investors in borderless transactions, new opportunities that do not exist in traditional markets, and security.
The innovative technology of this cryptocurrency includes borderless payments, smart contracts, faster transactions, and lower fees. Bitcoin transactions are also more secure. And this makes this cryptocurrency a preference for people that wants to complete transactions across borders in real-time.
With many countries struggling with inflation, more institutional investors are liking Bitcoin, and they see it as a hedge against inflation. Some investors even compare Bitcoin to copper and gold.
Custody Solutions Introduction
Financial institutions like mutual funds and hedge funds use custodians to hold their clients’ assets with professional custodians for regulatory purposes. Initially, Bitcoin investors feared the regulatory environment for Bitcoin and other virtual currencies. That’s because the crypto ecosystem didn’t have institutional-grade custodial solutions.
However, adequate custodians for securing the increasing crypto assets amount have instilled confidence in institutional investors. What’s more, regulatory guidelines for investing and operating with cryptocurrencies have led to the introduction of institutional-grade custodial solutions.
Today, investors can even find crypto custody companies with the backing of blockchain-focused venture capital companies. Such companies have incorporations with the ethos to offer crypto-native asset custodian for different institutional investors.
Some banks also have gotten the green light to provide custody to these companies. That means the national bank could eventually offer services to cryptocurrency custody firms on customers’ behalf. And this could include holding cryptographic keys for accessing and sending cryptocurrencies.
Final Thoughts
Initially, not many organizations were interested in Bitcoin. However, this has changed, and many institutions are investing in this virtual currency. Institutions have shown their interest in Bitcoin for varied reasons. Bitcoin’s demand among individuals and companies is also why every institution wants to own or invest in this cryptocurrency. And this might continue as the adoption and acceptance of Bitcoin increase.
This article has been published in accordance with Socialnomics’ disclosure policy.
