29 October 2020

Corporate Corporation Institutional Bitcoin Crypto

All that Bitcoin needs is better awareness and publicity. 

The good news is, every time government officials or leaders of influential regulators or banks lambast crypto and Bitcoin, it seems to embolden investors. Instead of pulling back and re-assessing their positions considering the “new information”, they double down, ramping up their purchases.

Bitcoin As a Hedge Against Potential US Dollar Devaluation

Bitcoin is proving to be an indispensable asset for savvy investors. Last week, Michael Saylor, the CEO of MicroStrategy, revealed that he owns over $230 million worth of BTC. At today’s prices, the influencer is in the green, roughly 30 percent in profits after buying each coin at just below $10k. 

MicroStrategy Invests $250 Million in Bitcoin
Source: MicroStrategy Buys Massive 0.1 Percent Of Total Bitcoin Supply (Bitcoin Magazine)

Meanwhile, MicroStrategy is up in profits as well. Two months ago, the public company invested $475 million in Bitcoin as part of their investment strategy. In the 3.5 years they have been in operation, the public company earned $78 million in profits. 

Fast forward to September 2020. Their decision to sink in and consider Bitcoin has paid dividends. Their $100 million surpasses every profit they generated in their previous business expedition.

This development points just how potent Bitcoin is both as a utility and a store of value. As a utility, Bitcoin boasts as a secure platform whose transactions are immutable. But its advantages supersedes its popularity and security. 

According to Michael Saylor, inflation in the US could soar to over 10 percent and was part of the reason why he gravitated to Bitcoin. By 2134, 21 million coins would have been generated by mathematics. Not at the whims of a committee or from a political leader. Out of this, over 18.5 million have been mined, and currently in circulation. 

Bitcoin Whales Are Starting to Surface

While traders made money, there was a record transaction this week when $1.5 billion worth of BTC was moved for around $3. There have been other high-value transactions from “Bitcoin whales” however few have received as much buzz.

Bitcoin Whales
Source: Forbes

The transactor didn’t move value to an exchange. Considering the level of attacks and losses subjected to a centralized exchange, the movement of $1.5 billion worth of Bitcoin to perhaps a cold storage shows that there are more holders than speculators. Cold storage devices for cryptocurrencies are not connected to the internet and are used for securing, often large amounts of crypto stash.

Risks of USD Inflation Stirs Corporate Interest

Over the last few weeks, the common denominator in high-grade investors turning their eyes to Bitcoin is to protect themselves from inflation. 

Last week, Square  cited inflation as a reason for their investment citing Bitcoin’s future potential, further explaining that there is unprecedented uncertainty from a macroeconomic and currency regime perspective. 

Concurrently, Mode Banking has confirmed that their new allocation of 10% of their cash reserves in Bitcoin said it was part of their “long-term goal to protect investors’ assets from currency debasement” and were “seeking to diversify away from low-interest money market instruments in order to maximise the value of returns from its recent fundraising.”

Looking Forward

Given the potential that institutional and corporate investment can have on the overall Bitcoin market, which is primarily owned by private retail investors, this public sentiment towards cryptocurrency can have major effects on where the price is headed by end of year. 

However, it’s important to stay logical and monitor how the market is moving. At the time of writing, the Bitcoin price was down three percent in the last hour but up three percent versus the greenback in the last week of trading. Notably, it is outperforming ETH, adding four percent in the last week of trading.

Bitcoin Daily Chart for Oct 29
Source: Bitcoin Daily Chart for Oct 29 (TradingView)

Prices are recoiling after retesting June 2019 highs. Since bulls are in control, building on gains following the break above $12,500 early last week, odds of even more gains remain high as long as prices are trending above Aug 2020 highs. Losses below the current support and the middle BB could trigger a selloff back towards $11,200 and even $10,000 in the medium term.

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Edmund McCormack
Tech industry veteran and blockchain technology investor. Simplifying cryptocurrency for almost a decade.

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