Wednesday, March 10, 2021

Bitcoin Nears $57K As Companies with Bitcoin Exposure Increases

Bitcoin broke the $50,000 barrier cleanly at the start of the week. At 18:50 GMT, the coin traded at $56,997, gaining 5.70% in the last 24 hours. This new price comes a relief to the market, especially the bulls, who have had to witness the downside of the coin this past week.

Despite new hands coming into cryptocurrencies, the slump of Bitcoin price has continued to persist. Robinhood, a trading platform, noted that more 3 million new users purchased crypto from their platform in January. Crypto buyers on the platform have exceeded 6 million since the start of this year. This is a strong indication that crypto adoption among retail investors has greatly increased.

Considering this, it is almost unfathomable why the volatility of the coin is so high. The dip in the market from $58,352 on February 21 to $43,700 on February 28 was huge. A fall of 25% within 7 days. This seems extraordinarily high.

Although this is not new in the traditional stock market. Tesla’s stock recently slumped 11.4% in a major price correction.

The price slumped as investors bought more

As Bitcoin continues to gain popularity and acceptance, the recent price dip has made more people weary.

Institutional investors and companies who have put money in Bitcoin have to go through bureaucracy as they convinced their investors why Bitcoin is a good investment and might have a hard time going forward. If the volatility of the coin continues to make the price wildly fluctuate, positive sentiment may also swing.

However, big corporations like MicroStrategy keeps buying.

MicroStrategy’s CEO Saylor announced on Feb. 24 that the firm had purchased another 19,452 Bitcoin, worth around $1 billion at the time. The next week, on March 1, he revealed that the firm had bought another small lot of 328 Bitcoin, worth $15 million at the time. As of writing, the business intelligence firm holds a total of 91,064 BTC, worth nearly $4.6 billion. This BTC holding is nearly 74% of the company’s market capitalization.

Jay Hao, CEO of crypto exchange OKEx said with regards to MicroStrategy:

We are seeing more institutional custodial solutions like BNY Mellon being developed but they will be coming later on in the year. It takes time. It’s not as simple for most institutions to simply decide to buy BTC like Michael Saylor. Most have to go through strenuous processes first and I think that is partly the reason for this pause.

Earlier today, JP Morgan filed with the SEC its intention to create a new investment product that is essentially a weighted basket of companies with cryptocurrency exposure.

As expected, MicroStrategy made up the largest share of the basket at 20%. Square Inc, Riot Blockchain, and Nvidia made up 18%, 15%, and 15% respectively. The remaining 32% of the basket comprised of the likes of AMD, PayPal, and CME Group.

The bull run at the start of the year brought in a lot of retail investors. However, it is glaring that many investors bought the benchmark cryptocurrency for a possibility of high returns not offered by other traditional asset. Evidently, when the price fell to $44,000, many sold off their BTC holdings.

Notwithstanding, it is clear that institutional investors are undeterred. The last volatility showed that many bought rather than sold. They welcomed the price drop as it allowed them to accumulate more at a lower price.

If you have any questions and comments on Bitcoin today, use the form below to reply.

© IbrahimAnifowoshe for Commodity News, 2021. | Permalink | No comment |
Published under: Bitcoin

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