Who is monopolizing Bitcoin?

On November 29, according to Deribit, the Guggenheim Partnership was approved by the US SEC to invest 10% of its $5.3 billion macro opportunity fund through Grayscale Bitcoin Trust (GBTC). 

If the Guggenheim Partnership finally determines that it holds $530 million in GBTC, it means that the largest holder of GBTC will change ownership again.

In addition to the Guggenheim Partnership, 23 institutional investors have publicly announced their holdings of GBTC shares, including BlockFi, Three Arrows Capital, and Rothschild Investment. Grayscale has become a compliant entry for many institutional investors Important entrance. 

In the tide of institutional investors entering the market, Grayscale is just a microcosm. According to LongHash reports, according to incomplete statistics, as of the end of October, a total of 23 listed companies reserve bitcoin. With the increase of Bitcoin holdings by listed companies such as Grayscale and Microstrategy in November, the number of Bitcoin reserves has exceeded 800,000, and the listed company has become a Bitcoin “whale”.

Store of value

Source: LongHash Blockchain Information

Institutional investors increase their holdings of Bitcoin

Institutional investors have begun to increase their holdings of Bitcoin before and after the halving.

On May 27, cryptocurrency analyst Kevin Rock wrote: “Since the halving, Grayscale Bitcoin Trust has purchased 18,910 bitcoins. Since the bitcoin halving, only 12,337 bitcoins have been mined. Wall Street wants Bitcoin, they don’t care what Goldman Sachs says (cryptocurrency is not an asset).”

Today, the number of bitcoins that institutional investors increase each week has far exceeded the amount of bitcoin mined.

On November 21, Kevin Rock tweeted that in the past week, three Bitcoin funds (Grayscale Bitcoin Trust, 3iQ Bitcoin Fund and ETC Group) had increased their holdings by 24,337 Bitcoins, which exceeded the number of Bitcoins in a single week. 1/1000 of the total currency issuance. You know, 24,000 bitcoins are several times the production of bitcoins that week.

Among the three Bitcoin funds, it is needless to say that Grayscale has increased its holdings. As of press time, Grayscale Bitcoin Trust Fund has assets of more than US$10.5 billion, and it increased its holdings of bitcoin by US$344 million in just one day.

The gray scale accumulation has become an important indicator of the Bitcoin market. When the weekend comes, there is often a trace of panic in the community: “The grayscale is off, will the price of Bitcoin fall?” When Sunday night came, people breathed a sigh of relief: “Don’t panic, tomorrow Grayscale is back to work.”

The 3iQ Bitcoin Fund can be described as a rising star.

The 3iQ Bitcoin Fund belongs to the Canadian asset management company 3iQ. In June this year, it issued a $10 million Bitcoin fund ($QBTC.U) on the Toronto Stock Exchange, creating a precedent for the Canadian stock exchange. On October 20, the market value of the Bitcoin fund exceeded 100 million U.S. dollars. At that time, 3iQ had less than 9,000 Bitcoin reserves, and it jumped to 13,000 one month later.

As of November 30, the 3iQ Bitcoin Fund held 16,484.55 bitcoins, and in November it increased its holdings of 7,554.35 bitcoins, an increase of 84.6%. It is worth noting that nearly 6,000 bitcoins came from the second half of November.

Among the many institutional investors, MicroStrategy is different. It is one of the few non-asset management companies among institutional investors. And this company with a market capitalization of less than US$2 billion can hold US$425 million in Bitcoin, and its CEO Michael Sayler is the biggest promoter.

Michael Sayler is an avid supporter of Bitcoin, and his opinion on Bitcoin can be seen by picking up a random piece of his opinion on Twitter. His top tweet praised Bitcoin like this: “Bitcoin is a group of network wasps serving the goddess of wisdom. It feeds on the fire of truth and grows exponentially behind the wall of crypto energy, becoming smarter, faster and more Powerful.” And his Twitter banner picture “Internet Hornets” is in the same line as his tweets.

Michael Sayler also did not shy away from publicizing his Bitcoin holdings. On October 28, he tweeted that he held 17,732 Bitcoins, with an average purchase price of 9882 USD. According to his idea of ​​“holding bitcoins for 100 years”, these bitcoins should still exist in his account, with a market value of more than 330 million U.S. dollars, an increase of about 160 million U.S. dollars from the market value at the time of purchase.

MicroStrategy’s purchase of Bitcoin is also his suggestion, and there must be his reasons for including Bitcoin in reserve assets. The 2008 financial crisis and the 2020 epidemic have continuously increased the risk of inflation in the United States. Michael Sayler saw the ability of Bitcoin to hedge risks. He believed that Bitcoin is more reliable than the US dollar to some extent, so he chose Bitcoin and also “Amway” Bitcoin to the company.

With the help of Coinbase, MicroStrategy increased its holdings of Bitcoin by US$425 million in two months. While increasing its holdings of Bitcoin, the company’s revenue ushered in growth, which may enable the company to continue to increase its holdings of Bitcoin.

In addition, the existence of “Bitcoin Store” cannot be ignored. The most eye-catching is Square and PayPal. Square’s Cash App is an important channel for Americans to buy Bitcoin. In the past Q3, Cash App Bitcoin sales reached $1.63 billion, an increase of approximately $760 million from Q2. The payment giant PayPal also joined the Bitcoin “purchasing army” after announcing its support for Bitcoin.

Tudou co-founder Marc van der Chijs tweeted: PayPal currently buys about 600 to 700 bitcoins a day, and Square buys about 400 bitcoins a day. The current daily output of bitcoin is about 900 bitcoins, which means that the newly produced bitcoins can only satisfy PayPal and Square purchases.

Bitcoin acceptance increases

Behind institutional investors continue to increase their holdings of Bitcoin, it is revealed that people’s acceptance of Bitcoin is gradually increasing, including traditional financial institutions and government departments on Wall Street.

Among traditional financial institutions, BlackRock Group (also known as Black Rock Group), the largest listed investment management group in the United States, supported Bitcoin earlier.

As early as 2018, BlackRock CEO Larry Fink pointed out that when Bitcoin is legal, it will be possible to launch a cryptocurrency ETF. At the same time, he said: Fink believes that Bitcoin ETF will eventually receive government support. In addition, Fink also stated that the company believes in blockchain technology.

He was optimistic about Bitcoin again when he participated in the show recently.

BlackRock’s interest in Bitcoin is increasing, and the number of searches on the website is increasing. Bitcoin fits the imagination of many people and may become popular. Bitcoin will have a place in the world financial system. At the same time, this is also a small The market has not yet been verified. The power of Bitcoin depends on how big the market is. As an asset, Bitcoin is gaining legitimacy.

In addition to Larry Fink, BlackRock Group Chief Investment Officer Rick Rieder said in the CNBC Squawk Box program earlier: Bitcoin has the potential to replace gold in the future.

JPMorgan Chase also changed its view on Bitcoin.

Three years ago, JPMorgan Chase was a staunch Bitcoin opponent among American financial institutions, calling Bitcoin a “scam.”

This year, JPMorgan Chase CEO Dimon admitted: At present, some “very smart people” are investing in Bitcoin-hedge fund manager Paul Tudor Jones is one of them.

The change in JP Morgan’s attitude towards Bitcoin is not only reflected in opinions, but also in actions. In May of this year, JPMorgan Chase announced that it would provide cash services to U.S. clients of cryptocurrency exchanges Coinbase and Gemini.

Compared with traditional American financial institutions, the US government’s attitude towards Bitcoin has been relatively vague, and it still maintains a wait-and-see attitude. It is the Russian government that recognizes the legal status of Bitcoin. A few days ago, Russian Prime Minister Mishustin pointed out at a government meeting that Crypto financial assets will be regarded as legal assets. Digital financial asset holders have the right to protect their legal rights and the government should make some changes to the current tax law.

The government began to accept Bitcoin and gradually eased restrictions on Bitcoin and other crypto assets. This is undoubtedly a “green light” for institutional investors to enter the market.

Bitcoin may become a “game for the rich”

Institutional investors are buying bitcoins frantically, and people can’t help but worry that institutional investors monopolize the bitcoin market.

Taking Grayscale as an example, the current total value of Grayscale Bitcoin Trust exceeds US$10.5 billion. If converted according to the current Bitcoin price, Grayscale holds approximately 544,000 Bitcoins. Excluding the unearthed and permanently lost bitcoins, the total number of bitcoins currently circulating on the market is less than 17 million. It can be calculated that the amount of Bitcoin held by Grayscale accounts for about 3% of Bitcoin’s current circulation.

Although the proportion is not very high at present, according to Gray’s weekly holdings, the proportion of Bitcoin held by Gray is expected to exceed 5% in another year. Coupled with the concerted efforts of other institutional investors, a certain percentage of Bitcoin will flow into the pockets of institutional investors.

The main reason for the increase in the price of Bitcoin is its scarcity, and this scarcity will become more obvious after the fourth and fifth block rewards are halved.

The Winkles brothers, founders of the Gemini Exchange, stated on CNBC on Monday: Bitcoin will surpass gold as a store of value within 10 years. Bitcoin is gold 2.0. If it wants to surpass gold, its market value will reach 9 trillion US dollars. This infers that the price of Bitcoin will reach $500,000.

If the price of 1 Bitcoin really rises to the height of 500,000 US dollars, then the market threshold for retail investors will be very high. A large number of retail investors choose to withdraw from the Bitcoin market, and institutional investors who hoard a large number of Bitcoins will become wealth in the world. Giant.

Imagine if the price of Bitcoin is 500,000 US dollars, then Grayscale currently holds more than 270 billion US dollars in the market value of Bitcoin. Moreover, Grayscale will continue to increase its holdings of Bitcoin, and the total asset value is unimaginable.

In addition, institutional investors will become Bitcoin “whales.” The influence of the “giant whale” on the bitcoin market and price is self-evident. Moreover, large institutions hold bitcoins ranging from a few thousand to hundreds of thousands. Once an institution sells bitcoin, huge amounts of money will suddenly flow into the market. Bitcoin will have a certain impact on the market and ecology.

This is the current situation facing Bitcoin. On the one hand, market acceptance has increased and more institutions are involved in Bitcoin investment; on the other hand, Bitcoin is concentrated in the hands of a few wealthy people, and the Bitcoin ecosystem faces the risk of capital monopoly. The traditional financial world is devouring the “pure land” of Bitcoin a little bit. It is hard to imagine what the Bitcoin rich list will be in a few years.

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