Why alternative investing in bitcoin is making more and more sense even for institutional investors?
The price of bitcoin is moving back to historic highs, above $ 19,000 and the mobility around the “king” of cryptocurrencies is increasing in view of the end of the year.
The high volatility of bitcoin is one of the reasons that traditional institutional investors generally do not include it in their shopping cart.
However, the peculiar environment that prevails in recent years due to the uninterrupted creation of new money and negative interest rates leads some institutional investors to look for alternative placements, such as increasingly “risky” stocks and bonds, gold, while some of them choose the bitcoin.
Of course, bitcoin placements are very small compared to their portfolios, but they are relatively significant amounts for the data of the -small- bitcoin capitalization.
Insurance giant MassMutual in the US, for example, with hundreds of billions in cash, announced that it has invested $ 100 million in bitcoin.
Financial analyst and investment manager Michalis Nicoletos, who monitors developments in bitcoin, wrote in a Twitter message that bonds worth a total of $ 18 trillion now have negative returns. Whoever buys them, if they keep them until the expiration has a 100% chance of losing money. And as the number of bonds with negative returns increases, it makes more and more sense to invest in gold and bitcoin.
Other factors that drive the price of bitcoin higher are:
- The so-called “cold storage”. Many bitcoin investors “take out” the money from the market and the accounts they keep in exchanges, choosing secure storage (in essence they store the code on a USB or other secure medium). So the bitcoin supply is reduced.
- Greyscale, a mega-investor in bitcoin, buys almost all of the new bitcoins that result from “mining”, which increases demand and reduces supply.