Following the crypto crash of March 2020, the cryptocurrency market entered a bullish cycle that is still going strong today.
To make the best of this bull run, retail investors turned to crypto exchanges and options trading platforms such as Bitlevex. However, the current positive momentum was reinforced by institutional money entering the markets as well.
Unlike the ICO craze of 2017 that was driven mostly by small-time investors, multinational companies are now joining in. In this article, we will go over some of the most notable institutional investments in Bitcoin and the reasons behind them.
Why are companies buying Bitcoin?
Bitcoin is the original cryptocurrency that was created back in 2009. Over the years, it has gained a strong following, allowing tons of investors to register massive returns (+15 million % gains since its release).
This success is entirely warranted, as Bitcoin brings a great number of solutions to our flawed financial system:
- Bitcoin is deflationary – only 21 million bitcoins can be created, which makes Bitcoin an increasingly scarce asset. This is in contrast to traditional currencies that governments print as they see fit, diluting their value in the long run.
- Bitcoin is decentralized – the bitcoin payment network is entirely independent of any central authority. This means that you don’t need an intermediary to execute bitcoin transactions, such as banks. Additionally, governments have no say on who can use Bitcoin, nor can they confiscate the coins or shut down the network.
- Bitcoin is global – everyone on the planet can use Bitcoin, and 1BTC equals 1BTC, no matter where you are.
What companies have invested in Bitcoin?
Bitcoin’s deflationary model has allowed the original cryptocurrency to become a flexible and efficient store of value. The benefits of bitcoin are becoming public knowledge, and some big companies are jumping on the bandwagon to ensure they play a part in this financial revolution.
Helmed by Michael Saylor, Microstrategy is a publicly-traded business intelligence firm. Saylor stated that by his calculations, the increase of the total money supply from central banks decreases the value of the money in circulation by 15% each year.
To go against this trend, Microstrategy invested a good amount of their treasury in Bitcoin in August 2020, to the amount of $250 million.
Two more Bitcoin purchases followed, which brought the company’s Bitcoin holdings to a staggering number of 90.531 bitcoins, equating to over $5 billion at the moment of writing.
Tesla is undoubtedly the flashiest name on this list. Elon Musk is a known crypto supporter and a big fan of memes. His favorite crypto is Dogecoin, mainly due to its meme status. In between two DOGE tweets, the Tesla CEO announced that the company would be buying $1.5 billion worth of Bitcoin in February 2021.
The announcement was met by extreme enthusiasm by the crypto community and brought a good dose of positivity to the market. As a result, Bitcoin almost doubled in price in February, starting at $30.000 and reaching the $60.000 mark by the end of the month.
While JPMorgan hasn’t invested in Bitcoin yet, it’s worth noting that the investment bank recently announced that it would be offering Bitcoin investment packages to its clients.
This comes as quite a surprise, especially if we consider the anti-crypto rhetoric CEO Jamie Dimon has had in the past.
The benefits Bitcoin has brought to the financial world are finally being recognized by financial institutions and “big money” investors. With Coinbase being recently listed on NASDAQ, cryptocurrencies have finally reached the status of serious investment assets.
This should solidify their presence in today’s financial ecosystem, increase mass adoption and instigate further growth of the market.