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World's Biggest Wealth Fund Now Holds Crypto

wealth funds

October 30, 2020 | 

JOHN K MWANIKI |  0 Comments| 

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The Bitcoin tides have been moving top through the recent past. Of all the news, one that seemed a game-changer was that MicroStrategy bought Bitcoin. It was looking into it as a protection against inflation and preparing for the future.

With a market capitalization of $1.4b, MicroStrategy bought Bitcoin worth 250m. It is the process of the largest corporate Bitcoin owner. It followed the first 21000 coins with an extra 16800 coins worth $175m.

The move by MicroStrategy has seen most of its top investors become Bitcoin owners. Most notable is the Norwegian Government pension fund. Also known as the Oil Fund, the group is the world's biggest sovereign hedge fund. It has over $1trillion worth of assets, controlling 1.4% of global stocks. 

With a stake of 1.5% in MicroStrategy, the hedge fund also owns part of the Bitcoin. It keeps on gaining more as the company keeps adding more of the digital currencies to its portfolio.

Data by Arcane Research analysis shows the Oil Fund owns around 577.6BTC. These are about its part within the intelligence company. This means it has approximately $6.3million of the value of Bitcoin.

The data from the research team also notes the hedge fund has a total of 600BTC. It means there is a likelihood of other sources of the virtual currency. The most probable is its stake in other companies. Most institutional investors have been embracing digital currencies.

It's a trend that has picked up and will likely continue.

Two other major companies also own Bitcoin following the MicroStrategy acquisition. These are the American giant's Vanguard Group and BlackRock Fund advisors.

Vanguard Group has a stake of 11.72% of MicroStrategy. This translates to 448.90BTC. 

BlackRock Fund owns 15.24% stakes. This is around 5829.30BTC. These are still some of the world's biggest entities based on exchange-traded funds.

Will Oil Fund Have Direct Investments in Bitcoin? 

It remains a mystery whether the Norwegian Government pension fund will take up Bitcoin. For now, it only has the currency through affiliation. As other entities take up the digital coins, they still seem to be far off the direct investment.

Arcane Research analyst Lunde voiced his sentiments over the same. He thinks that the Norwegian outfit will not have any direct investment in Bitcoin soon. He drew this from its current investment setup. 

The fund is significant on a fixed income, equities, and real estate. It is yet to own gold on its portfolio. This is despite having stakes in gold mining companies. It, for example, owns 0.95% of the Newmont Goldcorp mining company.

The development also comes at a tricky period for the leading cryptocurrency. After a sustained run through the year, Bitcoin has had a shaky past month.

It had a spirited run from March to trade at some of the highest by August. It has then had a staggering time through September and October. It has faulted from the highs of $12k, failing to beat a traditional resistance level. It is currently valued above $10k.

Traders are following, hoping it does not hit below the $10k. The point has so far worked well as its support level. Any slip lower will see a massive drop in value. It might also trigger massive sales and dumping of the coin. Most traders would be looking to at least make profits when it's still valuable. 

Reasons for Increased Bitcoin Attraction to Institutional Investors

Other than MicroStrategy taking up Bitcoin, several other companies have been on it. Coinbase noticed an increased uptake of the digital assets by top institutional investors.

It has taken some time for these investors to embrace the assets. One of the concerns has been the volatility. Most of the institutional investors operate on strict guidelines. They would not risk anything with uncertainty. The recent developments in the crypto currency industry have seen it become more acceptable.

The first means through which Bitcoin became accessible was through the derivatives. The coin provides for Bitcoin futures. 

The products allow investors access to Bitcoin without the underlying risks. The derivatives operate like traditional shares.

The success of the Bitcoin derivatives has also affected the other coins. Ethereum has also launched futures, the same as Bitcoin Cash. 

The rise of Bitcoin has collided with a decline in the traditional economy. The impacts of Covid-19 have been dire on the economy. 

Most of the conventional stocks have gone down as they stopped or reduced operation. This is more like spurred cryptocurrencies. It reinforced their role as a safe haven.

What does Institutional Investors in Bitcoin mean to the cryptographic world? 

The rise of institutional investors in cryptos is a welcome development. It is a testimony of how much the coin is becoming mainstream.

Still, there is more to come with the coin. Even though the institutions embraced digital currencies, there is more to explore. The world is yet to embrace the coins due to several concerns.

It comes with volatility and scam concerns. Still, these will be a matter of the past once top regulations come into force. The different governments are working on creating harmonized rules for the sector. Top of the group is the European Union.

The EU Commission recently released a detailed crypto regulation proposal. It has provided a framework for the digital currency world operations. It looks to control the assets and guide the service providers and users. All this is for investor protection. Once the field becomes safer, several other investors will pick up the coins.

The volatility concern still might take some time to halt. Even though some experts have predicted eventual stability, it is not yet time. Still, theirs is no need for concern. There are several investment tools like technical analysis. These allow investors to take trading positions needed. Most of the price projections with these tools are correct. 

Bottom Line 

The institutional investors have been warming up to virtual currencies in recent times. The latest moves show the world's biggest wealth fund own Bitcoin. The trend is likely to continue. Bitcoin remains attractive as the other coins also become more useful. 

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