Institutions Are Entering the Crypto Space

4-minutes Read

On March 13, 2021, the price of Bitcoin once exceeded $61,000, setting a record high. The previous bull market occurred at the end of 2017, when Bitcoin broke through $19,000 for the first time. But the biggest difference between the bull market that started in late 2020 and 2017 is that the market has been strongly supported by traditional companies and institutions.

Due to the impact of the pandemic, countries have initiated large-scale quantitative easing policies to stimulate the economy, and institutions have sought various investment targets to combat inflation risks. Bitcoin, hailed as “digital gold”, has thus become a popular investment target.

Listed companies including MicroStrategy, Tesla, Square, Meitu have successively bought a large number of Bitcoins. Meanwhile, BlackRock has begun to get involved in Bitcoin investments, and Goldman Sachs also plans to restart a Bitcoin trading desk. According to Bitcointreasuries, currently 46 listed companies or publicly tradable investment products hold a total of approximately 1.36 million bitcoins, accounting for 6.5% of the total supply of bitcoins.

The following are some of the major institutions and companies that have entered the field of digital assets.

1. Grayscale Investments

Grayscale is the world’s largest digital asset management company, with a current asset management scale of 39.8 billion U.S. dollars. In 2020, Grayscale’s asset management scale has increased 10 times.

Grayscale’s main product is the Bitcoin Trust Fund. In recent years, it has also launched trust funds for mainstream cryptocurrencies such as Ethereum.

2. Galaxy Digital

Galaxy Digital is known as “the crypto version of Goldman Sachs” and was founded by former Goldman Sachs executive Michael Novogratz. It is an institution that provides comprehensive financial services in the field of digital assets. Its main business includes asset management, proprietary investment, trading and investment banking.

Galaxy Digital has also launched public funds focusing on Bitcoin and Ethereum, which currently holds approximately 16,000 Bitcoins. In addition, it has invested in a number of blockchain projects in the finance domain, including BlockFi, BitGo, etc.

3. MicroStrategy, Tesla and other listcos

Listed companies such as MicroStrategy and Tesla originally had nothing to do with blockchain or cryptocurrency, but they all bought bitcoin assets in large shares.

• MicroStrategy began to purchase bitcoins in August 2020. As of March 12, 2021, MicroStrategy purchased a total of 91,326 bitcoins at a price of US$2.211 billion, with an average price of US$24,214.

• Tesla purchased $1.5 billion worth of bitcoins in January 2021 and said it would accept bitcoin as payments from customers. This move pushed Bitcoin to a record high at that time.

• In March 2021, Hong Kong-listed company Meitu announced that it had purchased USD 22.1 million worth of Ethereum and USD 17.9 million of Bitcoin.

As inflation continues in the real world, more traditional institutions and companies are expected to accommodate cryptocurrencies in their investment portfolios in 2021.