There is a spike in the value of Bitcoin to the current price of $18,200. Since companies are holding over 842,000, it means that it holds bitcoin worth $15.3 billion.
It turns out that most Bitcoin holders are institutional investors. As of 20th Nov, companies hold up to 4.54% of the total Bitcoin supply in the market. According to Bitcointreasuries, Companies hold around 842,229 BTC, which is an equivalent of $15.3 million at the current price.
There is a steady growth of public companies and institutional investors adopting the currency. MicroStrategy has been the leader who purchased $425 million BTC, which spiked an institutional frenzy.
What’s the fuss about?
Many companies and institutions have likened Bitcoin to a digital storage of value. With the current pandemic, Bitcoin has been embraced in hedging portfolios from inflation. This has led to the massive growth of the currency.
Despite its initial presumption of volatility, Bitcoin has been likened to a hedge asset since it can achieve lower volatility in the long run than traditional assets. This is because they are not as centralized as traditional assets, governed by the central bank, and influenced by many external factors.
Since it is a hedge asset, it can act as insurance to a diverse portfolio such that when there are market dips, it is safe. In addition to that, Bitcoin has large growth potential as more and more people are embracing it. It is, therefore, a good investment in the growth of profits.
From the interview with the MicroStrategy CEO, Michael Saylor, Bitcoin is good as a storage value and should not be used just like a normal currency or a payment network.
The growing perception of Bitcoin as a store of value makes the demand to grow with time.
Since companies hold up to 4.5% of the total Bitcoin supply, it equates to 18.5 million, which is not far from Bitcoin’s market cap of 21 million. That’s clear that companies are optimistic about the potential of Bitcoin.
When companies continue to hold BTC, they will decrease the supply of Bitcoin in the market and lower the selling pressure over time.
The influence from central banks makes investors consider Bitcoin for the short term to long-term strategy, which means BTC will grow stronger over time. Many investors fear the risks of liquidity and inflation posed by the central bank, which makes other assets a risky investment unlike Bitcoin. The impact of the pandemic has many many to run to alternative assets like bitcoin as a safe haven.