Institutional investors buy Bitcoins like crazy after halving

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Large institutional institutions have had unprecedented interest in buying Bitcoins since the BTC halving.


The price is not a factor

Information from investment insiders shows that interest from institutional investors in Bitcoin is increasing rapidly. This has led several analysts to conclude that the Bitcoin price is going to experience a huge increase.

Grayscale’s Bitcoin Trust, also known as “GBTC”, is a good example of the growing institutional interest. The trust has grown steadily in recent years, but growth has really accelerated in the past few months. Interestingly, the Bitcoin’s price fluctuation does not seem to affect this growth pattern.

Daily change in BTC price and growth GBTC – Source: Grayscale

Grayscale can swallow 550 thousand Bitcoins next year

What makes Grayscale a major player is more than just the fact that more than 90% of the inflow comes from the institutional players.

Namely, the sheer number of Bitcoins Grayscale owns reduces a circulating supply of BTC tokens. This is because all crypto tokens are locked in the vaults of Coinbase. Grayscale already manages more than 350,000 Bitcoins. This represents 2% of Bitcoin’s total circulating supply, without taking into account the number of lost coins.

In the past three months, the pace at which institutional investors have invested in GBTC has tripled. If this trend continues, the company will manage 400,000 Bitcoins within three months. In another 6½ months after that, it will manage approximately 550,000 Bitcoins. That is no less than 3% of the total supply.


Lending platforms cannot meet the institutional abundance

It is not clear whether this trend was by definition caused by the Bitcoin halving, but the growing interest is also confirmed by other sources. Alex Mashinsky, CEO of Celsius, a crypto lending platform that currently contains 55,000 Bitcoin, says:

“We now have more than 260 [institutionele leners] and we’ve taken out $ 10 billion in loans since launch. Bitcoin’s price doesn’t matter, it’s about the volatility of the prices going up and down. ”

He also added that he could easily lend another 100,000 Bitcoin if he had one; this despite the fact that Celsius charges an annual interest rate of 5 to 12 percent. Zac Prince, CEO of BlockFi, another crypto lending platform, recently said he expects the increase in institutional interest to continue:

“Volatility, which some see as a risky investment, has now allowed it to recover faster than any other asset after the first market-wide downturn in March. It has now risen 94% since March 16 and continues to rise. We expect institutional interest in this asset to increase sharply in the coming years, along with wider consumer acceptance. ”

It’s important to note that, unlike Grayscale, platforms like Celsius and BlockFi are unlikely to push the price up. This is because they do not take their Bitcoins out of circulation. On the contrary, they promote market liquidity.

Another improvement on the supply side of the equation is expected through the purification of the mining. With inefficient miners leaving the network, the remaining ones will become more profitable and will be able to sell less of their Bitcoins to support the business. This will decrease the supply.


Perfect storm

Matt D ”Souza is the CEO of Blockware Solutions, which is also a Bitcoin hedge fund. He believes that the combination of the central banks injecting billions of dollars into the economy and the declining issuance of new Bitcoins due to the halving creates a “perfect storm”:

“You inject two trillion. Maybe they should inject more based on how the economy is. A lot of money is injected. And it creates a perfect storm for Bitcoin. “

Bloomberg analyst, Mike McGlone, believes that general adoption in the near future will lead to SEC approval of an electronically traded fund, or ETF:

“Open interest futures represent increasing general acceptance and indicate the likelihood of ETF futures on the US-listed exchange.”

If this trend continues, data seems to indicate that Bitcoin’s price could rise in the next 12-18 months. As D’ouza summed it up:

“What makes the price change is net fiat into a net fiat every day. Bitcoin trades a few billion in volume, but this does not move the price. “



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