The crypto sector has seen global institutional investors stockpile cryptocurrencies and mainly Bitcoin in the last couple of months. Many analysts consider the move as one of the biggest bullish trends ever recorded.
Overall, many international companies have acquired large amounts of Bitcoin. Also, the interest rates in Bitcoin surged by a considerable percentage after Tesla revealed to invest around $1.5 billion in Bitcoin, which propelled Bitcoin price to hit a historical level.
As per Coinshares, an asset management company, monetary flows for Bitcoin and Altcoins investment breached the $1.3 billion mark as of January 2021.
Bitcoin and other cryptocurrencies have indicated a great price momentum over the previous months and show no sign of slowing down. Let’s dive deeper and get a better picture of companies that are investing in digital coins.
Microstrategy is a renowned global firm that has accepted Bitcoin as a payment means and holds BTC as a reserve asset.
Also, the company is well known for its mobile software products and has acquired lots of Bitcoins amounting to 295. This places the total tally for its Bitcoin reserves at 71,079, which is approximately $3 billion. Michael Saylor, the CEO of Microstrategy stated that the company was investing over $1000 into the crypto each second.
Although many CEOs are reluctant to disclose their investments, Saylor has made it quite clear that he invested a large amount worth 17,732 BTC.
According to reports by BitInfocharts, Saylor appears among the leading Bitcoin holders. However, it’s a change of heart since Saylor was skeptical of Bitcoin back in 2013.
During the Binance Blockchain event held in early February, Saylor justified why he settled for Bitcoin as a reserve asset over gold. One of the reasons is that gold yields are not attractive compared to Bitcoin. According to Saylor, Bitcoin appears as digital gold and a better store of value in the event of inflation within the financial market.
Moreover, to trade cryptocurrencies such as Bitcoin, Ethereum, and Ripple, you need reliable and regulated platforms such as Crypto Engine.
Tesla, an international car company, joined other companies investing in cryptocurrencies in the last couple of months. The SEC filing shows that Tesla invested over $1.5 billion into Bitcoin, which is roughly 10 percent of its $19 billion cash reserves.
Tesla’s investment into the dominant crypto (Bitcoin) shows a revised investment policy that is intended to expand its working capital while optimising the yields.
The car company will now start to accept Bitcoin as a payment method for its merchandise, which has left many analysts wondering if the company will increase its liquidity levels or proceed to hold the digital coin after receiving the payment.
Earlier on, before making the move, Elon Musk who doubles as the CEO of Tesla and SpaceX has been tweeting on his Twitter bio the trends of the digital coin. At the end of 2020, Saylor, the CEO of Microstrategy expressed his willingness to share the Bitcoin investment strategy with Tesla CEO. According to Saylor, Bitcoin investment seemed like a $100 billion favor to Tesla shareholders.
Later, the Tesla CEO added the #Bitcoin hashtag on his Twitter bio, indicating the company’s move into the dominant crypto.
3: Galaxy Digital Holdings
A report by Bitcointreasuries.org reveals that Galaxy Digital Holdings, a merchant bank owns around 16,402 Bitcoins which stands at $770 million as per market value.
Michael Novogratz started Galaxy Digital Holdings in early 2018. The firm has transformed within a short while and works closely with other cryptocurrency companies such as BlockFi. Novogratz is a strong supporter of digital currency. He claimed that the economic measures taken by various governments to address the pandemic impacts propelled crypto interest rates back in April last year.
Afterward, during the same year, the Galaxy founder stated that the fluctuations of the digital coins implied that gold appeared as a better alternative as a store of value. According to Novogratz, Bitcoin excels better compared to gold but urges investors to hold a small percentage than gold since cryptos are encircled by price fluctuations.
4: Grayscale Bitcoin Trust
When it comes to Bitcoin investment, it’s undeniable that Grayscale Bitcoin Trust is among the largest investors within the crypto industry.
The company emerges as the largest institutional investor in the crypto industry, making around $30 billion worth of investment in Bitcoin. As per data from Bitcointreasuries.org, the company owns over 656,166 BTC, which translates to around 3 percent of the overall Bitcoin supply.
In early January 2021, the company resumed its Bitcoin Trust to crypto traders after a brief break and acquired over 2172 BTC during the initial day.
Also, Barry Silbert, the creator of Grayscale is a renowned supporter of the crypto, with his Twitter activities pacing an emphasis on the Bitcoin trends.
Why are companies investing in cryptocurrencies?
There are many reasons why global companies have joined the cryptocurrency race, which range from the rising demand for these tokens from all corners of the world to investment alternatives. The following reasons are why global firms want a share of cryptocurrencies.
1: Crypto prices
Cryptocurrencies and mostly Bitcoin hit the industry a decade ago. Back then, Bitcoin was trading at less than one dollar. Several years later, the Bitcoin price has recorded a roller coaster trend breaking new all-time highs, and currently, it’s trading at $62,882.50 as of this writing.
2: Global inflation
The rising global inflation appears as a significant factor that has driven many institutional investors to seek alternatives within the crypto industry.
3: Weakening fiat currencies
Many local currencies such as the US dollar and other fiat currencies have been recording a declining trend over the years. Although the devastating impacts of the pandemic shook many fiat currencies and to some extent the digital currencies, several cryptocurrencies rebounded quickly, especially Bitcoin that performed exceptionally better than all currencies.
4: Store of value
The pandemic impact was an awakening call for many companies and investors. To protect and diversify their assets, many companies are turning to digital currencies since they have demonstrated reliability despite the pandemic cloud.
Latest trend in crypto are NFT-s or non fungible tokens. Many companies have begun to accept cryptocurrencies as a payment method. Several other firms are still weighing their options on joining the cryptocurrency race. Also, many factors have propelled many companies to seek cryptocurrencies to address the rising demand for digital currencies within their large user base.