In 2017, Bitcoin reached its all-time high position. At that time, BitMEX witnessed $20,093, while in some markets, value even touched the figure of $23,000. Since that time, the price has dropped by almost 53%. But Institutional inflow is increased to an unprecedented level since that time.
Factors Behind Institutional Growth
There are three possible factors behind the institutional growth, which include the maturity of the BTC market, positive institutional sentiments for Bitcoin, and other strengthening fundamentals.
When coin reached its highest value in 2017, $2,966 billion of Grayscale funds was invested in Bitcoin. Now, the invested capital in June 2020 witnessed above $3.5 billion, which was 20% higher than that figure occurred in 2017.
According to the Grayscale Digital Asset Investment Report for the first quarter of 2018, it revealed that 56% of investments received from the institutional investors:
“Through our analysis, we determined that most asset inflows are coming from institutional investors. This segment comprises roughly 56% of all investment YTD, followed by accredited individuals (20%), retirement accounts (16%), and family offices (8%).”
On the other hands, 2019 report of Grayscale showed that 88% of investments came from institutional investors:
“Institutional investors, primarily hedge funds, continued to be the primary source of investment capital in 1Q20 (88%), with an even higher share than T12M (79%). The geographic source of new investment capital this quarter was more heavily weighted to offshore investors, while historically it has been roughly split between U.S. and offshore investors.”
JPMorgan was severely hostile towards Bitcoin as JPMorgan CEO called it a fraud. But now, it has also changed its perspective on the digital assets, and even its analysts accept that “Bitcoin has staying power.”
“Though the [bitcoin] bubble collapsed as dramatically as it inflated, bitcoin has rarely traded below the cost of production, including the very disorderly conditions that prevailed in March.”
Famous hedge fund manager Paul Tudor Jones realized that Bitcoin is the best hedge fund. In an interview with CNBC, he said:
“[I have] just over 1% of my assets in bitcoin. … Every day that goes by that bitcoin survives, the trust in it will go up.”
The rush over crypto exchanges is also declining, which shows that retail investors are decreasing in numbers. Glassnode reported:
“BTC Balance on Exchanges just reached a 1-year low of 2,622,984.499 BTC Previous 1-year low of 2,623,005.552 BTC was observed on 19 June 2020.”