Institutional Adoption: Flood of Investment into Bitcoin Market

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This post was most recently updated on October 16th, 2020

Bitcoin sees another corporate investor enter the cryptocurrency market – pointing to a bullish possibility of institutional adoption. Picking up $115 million, asset management firm Stone Ridge takes its holdings in assets under management to more than $1 billion worth of Bitcoin.

The purchase made via Stone Ridge’s spin-off New York Digital Investment Group (or NYDIG) stands as an indication that investors are looking to Bitcoin to hedge against the possible decline of the US dollar and the weak federal currencies.

Investors simply following the potential for profit

Bitcoin has held healthy growth since recovering from a COVID-resultant knock in March. Recently, the cryptocurrency has been steadily increasing, finding and testing new support barriers without any major recorrection downwards. This health could be attracting investors who are looking to diversify their portfolios to add safe-haven assets to hedge against the dollar. As reported by Forbes, Stone Ridge CEO Robert Gutmann stated:

“Different institutional allocators are used to buying fund management services, so that’s what we sell them. Macro hedge funds are used to buying prime brokerage services. So that’s what we sell them. RIA’s are used to buying a set of ultra high net worth advisory solutions. And that’s what we sell them.”

Bullish advocacy for more growth in the Bitcoin market

In response to the news, MicroStrategy CEO Michael Saylor suggested that this represents the shift towards Bitcoin investment.

This is coupled with growing concerns that the value of the dollar will sink as the United States Federal Reserve continues to print money, threatening hyper-inflation. This, to the point that financial experts such as Rich Dad, Poor Dad author Robert Kiyosaki advocates to short the dollar and look to havens like Bitcoin, cryptocurrency altcoins, and commodities like gold and silver.

Bitcoin rush as a result of the Coronavirus?

Other economists put the rise of interest in Bitcoin down to the costs that the global economy has suffered because of the global pandemic. As reported by Lawrence Summers and David Cutler, the costs of the Coronavirus – both direct and indirect financial suffer – are predicted to be around $16 trillion. This will be a heavy hitter for the GDP of the US, as well as individual families. As per the report:

“The total cost is estimated at more than $16 trillion, or approximately 90% of the annual gross domestic product of the US. For a family of 4, the estimated loss would be nearly $200 000. Approximately half of this amount is the lost income from the COVID-19–induced recession; the remainder is the economic effects of shorter and less healthy life.”

American broadcaster and host of the Keiser Report, Max Keiser, pointed out that the solution for a less-than-ideal K-shaped recovery for the global market lies in the cryptocurrency industry. Should the market see a K-shaped recovery, the spread of wealth would result in further inequality; resulting in a massive wealth-poverty gap.

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