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Why do Institutions Suddenly Care about Bitcoin?

Without a doubt, Bitcoin has become an increasingly popular asset among institutional investors. At the end of the second quarter of 2020, Fidelity reported that 36% owned crypto assets. Another survey, conducted by insurance company Evertas, revealed that respondents believe hedge funds will dramatically increase their holdings of crypto assets. It also projected that 90% of institutional crypto asset holders hope to invest even more in BTC next year.

Bitcoin has established its place in investment portfolios as an asset to hold as a hedge against inflation and currency devaluation. However, beyond that, there are real technical reasons that institutional investors are becoming increasingly bullish towards Bitcoin. Some forecasts believe that it will hit $1 million by 2025.

The future value of Bitcoin may remain a matter of debate. However, investors and financial institutions think that having BTC could be less risky than having no exposure to Bitcoin at all.

What are institutional investors seeing in Bitcoin now that they didn’t see before?

The borderless network of Bitcoin and blockchain technology

For institutional investors, Bitcoin serves as a diversification tool to hedge against highly correlated markets like the S&P 500, Nasdaq, and the dollar. Two main areas in which Bitcoin and Blockchain technologies offer the most value to institutional investors are secure, borderless transactions and access to new opportunities that cannot exist in traditional financial markets.

Bitcoin’s groundbreaking technology, including smart contracts, borderless payments, lower fees, and faster and more secure transactions, is the catalyst that will prepare us for a future to go digital.

With the US dollar’s inflation on the horizon, investors are also beginning to like Bitcoin more and more. They have identified it as the best hedge against inflation, comparing it to gold and copper.

Introducing quality custodial solutions

Custodians are used by financial institutions such as hedge funds and mutual funds. They are required to hold client assets with a professional custodian for regulatory purposes.

The regulatory and custodial solutions provide reassurance to institutional investors who might otherwise have been skeptical. They are also helping take crypto exchanges to a higher level. Therefore, encouraging them to protect investors’ money from theft or misappropriation. This has become an essential catalyst for making digital assets more attractive to institutional investors and funds.

The institutional demand for Bitcoin

Institutional investors are moving toward holding Bitcoin in “physical” form rather than cash-settled futures. Institutional investors’ integration into the crypto ecosystem and their interest in maintaining it is a positive sign for mainstream adoption.

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