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- Institutions are buying more bitcoins than it is mined.
- Cryptocurrencies can be used against economic uncertainties.
- Ethereum is the next significant asset to be included in the futures contract.
The launch of CME Bitcoin futures in 2017 and options in 2020 allowed institutions to invest in Bitcoin more aggressively.
Institutions revolutionizing cryptocurrency investments
- Morgan Stanley is the first US bank to offer its wealth management clients investment in cryptocurrency.
- MicroStrategy CEO Michael Saylor has invested more than one billion dollars as cryptocurrency investment.
- Tesla said in January it had invested $1.5 billion in Bitcoin.
- $8 trillion asset manager Blackrock has authorized two of its funds to invest in Bitcoin Futures.
- Paypal in October 2020 said it would help customers buy, sell and hold bitcoin and other cryptocurrencies using online wallets.
Bitcoin against economic uncertainty
There were significant challenges that prevented institutions from directly investing in cryptocurrency, the main one being the unregulated market. The institutions did not want to go against legally undeclared assets initially. Many have now realized how Bitcoin or other cryptocurrencies can be used against economic uncertainties and other geopolitical factors. Investment in cryptocurrencies can be used as a hedge against inflation.
Financial uncertainty in the traditional space is also the main reason for institutional interest in Bitcoin. Internally Mainstream media such as Governments, retail spaces, and institutions want to legitimize cryptocurrency. Consumers are being educated and using them in retail purchases. Some of the governments are using their digital currencies. China has recently launched its digital currency on a trial basis.
Decentralized Finance is the future of payment
The lack of public infrastructure for institutions to directly invest in cryptocurrency was the primary concern for investors. Now innovations in decentralized finances are targeting directly individual and institutional investors. Bitcoin and other cryptocurrency prices are highly volatile. Price volatility in a market is also profitable if the trader knows how to handle it. Seeing it as a vehicle of investment, institutions are optimistic about the rise in Bitcoin price.
Price volatility and high liquidity attract investors. Traditional investments like real estate are highly volatile but lack liquidity. Foreign markets are highly liquid but lack volatility. Advantages cryptocurrency offers over fiat currency are secure payment, low transaction fees, and fast transfer. The sense of optimism over the technology is another factor for demand in bitcoin and cryptocurrency.
In Conclusion
Ether is the next significant asset that has been closely watched. Ethereum is the next considerable asset listed in futures contracts, with a wide range of applications. Its reputation as a potential investment is growing. Institutions are buying up more bitcoin per month than the ones that are being mined, and it is not just for everybody. This is the reason bitcoin’s price rose and increased in the investments.
