There is a lot to unpack when it comes to cryptocurrencies. The industry might have begun as a fad over a decade ago, but it has since evolved into one of the most profitable in the world.
The global crypto industry is worth over $300 billion, with assets on the rise just about every day. It’s no secret that more companies are getting bitten by the crypto bug. As this trend continues to push on, many believe that assets like Bitcoin could just as well see massive gains. At this point, it’s a matter of when – not if.
In 2020, however, the market has seen a significant shift. Many understand that Bitcoin’s rally has usually been fueled by the growth of everyday investors who would like to gain from the surge. Whether they’re people who see crypto as a get-rich-quick scheme or they actually believe in the industry, it doesn’t matter much. As long as they put their money in and are expectant, many of them have reaped benefits.
A Pandemic-Infused Push
This year, the story changed. Initially, Bitcoin began the year with high hopes of a bull run, thanks in no small part to anticipation over the Bitcoin halving and belief that the asset had put its woes of 2018 (the crypto winter, etc.) behind it. However, the asset started the year pretty slow as it appeared that the hype of 2019 had thawed.
Then, the coronavirus pandemic hit and markets across the world took a tumble. Bitcoin dropped from over $10,000 a unit to about $3,800 in the middle of March, signaling that the top crypto asset wasn’t immune to the horrors of the pandemic.
Interestingly, however, it has managed to bounce back once more. Currently, data from CoinMarketCap shows that Bitcoin is trading at a price peg of $11,388. That’s over twice the level that it held in the middle of March, showing that Bitcoin is indeed back from the depths of market downturns.
This rise has also come at a much faster pace than a lot of other assets. To date, traditional stocks and markets across the world are still staggering from the effects of the coronavirus. Companies are shutting down, people are losing jobs, and market metrics are looking balanced at best. These mean that economies aren’t doing so good, and countries’ currencies are still taking a beating.
Alternative assets haven’t done so well, either. The petroleum industry was stunned in May, when the West Texas Intermediate (WTO) index plunged into negative price territories for the first time. The asset has risen since then, but performances still haven’t been enough to encourage investors. Gold is holding its own pretty well, but its performance isn’t anywhere near that of Bitcoin.
Factors like these mean that investors are jittery – now, more than ever. Everyone is looking for a way to hedge against the risk of the coronavirus, and Bitcoin appears to be the obvious choice. With a rising trend and the possibility of at least maintaining investors’ wealth, Bitcoin is indeed the safest route for investors to go.
Institutions On the Move
So far, institutional investors have shown that they understand this. Earlier this week, blockchain and crypto analytics firm Coin98 Analytics published a picture showing some top publicly-traded companies that have made significant best on Bitcoin this year.
The graph showed that the top ten institutional firms have committed a total of $6 billion to Bitcoin. Top on the list is Grayscale Investment, a New York-based firm that has established itself as the top institutional investment company within the crypto space.
While Grayscale has always been a Bitcoin bull, the company made even bigger plays in 2020. Now, it holds a total of $5.1 billion in assets under management. In the last week of September, market monitoring source Bybt confirmed that the company had purchased an additional 17,000 BTC into its Bitcoin Investment Trust.
With such a number, Grayscale now holds a staggering 2.4 percent of all the Bitcoins worldwide. CoinMarketCap data shows that there are 18.5 million Bitcoin tokens available, and the asset is unable to have more than 21 million. So, there’s only a little less than 2.5 million units left to be mined. At this rate, Grayscale could stop buying Bitcoins and still have over 2 percent of the total assets in circulation when the last Bitcoin block is mined. With 449,000 tokens in its watch, this company’s hold on the industry is incredible.
Coming in second place is British-based asset management firm CoinShares. The company now has 69,730 BTC (worth $797 million) in its custody, with the potential of adding more always present
In third place, we have MicroStrategy. Based out of Virginia, this company is the largest provider of cloud-based business solutions. In July, the company issued a press release announcing that it had adopted a “Bitcoin standard.” As the release explained, it purchased 21,454 BTC for $250 million.
A few days later, the firm’s CEO confirmed that it had bought another 17,000 BTC. That purchase brought the company’s total Bitcoin haul to about $425 million in value.
In fourth place, we have Galaxy Digital, a merchant bank with 16,551 BTC – about $182 million. The firm purchased ad space in the Financial Times in August, asking people to purchase Bitcoin amid the current economic situation.
Another notable company is top payment processor Square. The firm announced that it had purchased $50 million in Bitcoin last week, explaining that the commitment represented 1 percent of its total cash reserves. It’s evident that more companies are understanding the significance of Bitcoin and how well it works for them.