A few years ago, large companies considered it a good form to throw stones at the crypto industry, with heavy criticism of bitcoin and other popular cryptocurrencies. Today, many market participants have been forced to radically change their view of this new financial instrument and even join the crypto community.
What is the reason for the change in attitude of these big players, and which organizations can be called major bitcoin investors? Learn from our material!
Bitcoin has become attractive for business
Cryptocurrency has been around for over 12 years. Of course, this is nothing compared to traditional money, but despite their youth, cryptocurrencies are developing much faster than classical financial instruments due to their technical characteristics.
This rapid development has helped bitcoin (BTC), the most heavily capitalized digital asset, pass through several significant phases in just a few years. We suggest you look at these in more detail.
1 – Launch and spread among crypto enthusiasts
The first block in the cryptocurrency network was created on January 3, 2009. A few days later, on 12 January, the producers of coinhandjob satoshi Nakamoto sent ten bitcoins to crypto enthusiast Hal Finney.
Later, on October 5 of the same year, the New Liberty Standart Exchange began trading in cryptocurrency. Prior to 2011, bitcoins were mined (coins issued from the network) and used exclusively for payments by crypto enthusiasts.
2 – the first wave of mass use
In 2011, a dark web marketplace called Silk Road began accepting bitcoin. Sellers were attracted by the anonymity of the cryptocurrency, which protected their businesses from prosecution.
In many ways, it was thanks to the Silk Road that bitcoin gained fame as a financial tool for money laundering. Despite the shadow cast on the cryptocurrency, the dark web marketplace still helped popularize the project. As a result, bitcoin entered a new phase of development.
3 – The Second Wave of Crypto Audience Growth
The Silk Road was eventually closed in 2013 under a cloud of scandal. In the same year, bitcoin broke the $1 billion capitalization mark and entered a phase when it was touted as an alternative to fiat currency. From 2014 to 2017, many large companies began to organize a means to accept bitcoin as a form of payment.
Bitcoin gained even more momentum after the cryptocurrency halving in 2016 (halving the level of rewards for mining) and futures based on BTC are set to be launched. However, after reaching a peak of $20,0000 in December of 2017, a crypto winter fell on the market lasting until the spring of 2019. This crisis helped drive many speculators and vulnerable participants out of the market.
4 – Institutional investors enter the market
After peaking in December 2017, the value of bitcoin underwent a long decline that lasted until the summer of 2019, when it experienced a growth spurt. This was followed by a prolonged correction that brought the cryptocurrency to a new phase of development, which began in late 2020.
It was a period of positive movement similar to 2017 which followed the halving. But, unlike the previous development phase, Bitcoin was all set for the new phase in 2020.
First of allCryptocurrency has already secured the status of an alternative financial instrument. This was facilitated by the coronavirus pandemic when many countries attempted to save their economies by printing new batches of currency and injecting them into their economies. For example, this ‘quantitative easing’ was widely practiced in the United States.
An artificial increase in the money supply of an economy can negatively affect the value of its currency. Unlike the dollar and other traditional currencies, bitcoin has a limited maximum issue – around 21 million bitcoins will be issued in total. At the same time, the issuance rate of BTC continues to decrease, making it possible for Bitcoin to retain and even increase its value.
With some countries opting to engage in quantitative easing, many market participants have begun to consider using BTC as a savings asset. This was clearly demonstrated when Americans began buying cryptocurrencies in large quantities with the benefits of the government they gained during the coronavirus pandemic.
OthersMany large companies have appeared in the market that support the digital asset market in one way or another. Furthermore, accepting cryptocurrencies as a form of payment is no longer common, with the global cryptocurrency market capitalization approaching that of Apple.
Comparison of global cryptocurrency market capitalization with major companies as of April 7, 2021.
Source: Twitter Coin98 Analytics
thirdMany market participants, including managers engaged in capital management, have become convinced of the stability of bitcoin’s correction mechanism. The fact that each halving reduces the mining speed of an already scarce BTC, leads to a scarcity of the asset in the market. The history of this cryptocurrency has shown that when this mechanism is employed, the price of bitcoin increases. The main reason for this is that many companies have decided to invest in BTC.
In short, this is how bitcoin went from an unknown digital asset with a dubious reputation to a financial instrument with many large investors.
Big Bitcoin Investors – Who Are They?
There are many companies in the market whose investments in BTC have had a significant impact on the cryptocurrency. One of them is an analytical software provider called Microstrategy.
In August 2020, the organization acquired 21,454 BTC, worth approximately $250 million at the time of the transaction. Microstrategy became the first public company to invest part of its capital in bitcoin. Since then, the organization has repeatedly announced an increase in its investment in BTC.
One of MicroStrategy’s latest buys fell on May 18, 2021, when the price of bitcoin fell to $30,000 amid mounting regulatory pressure from China. According to the company’s CEO, Mike Saylor, MicroStrategy has accumulated a total of 92,079 BTC taking into account the new purchases.
To see the impact of Microstrategy’s decision to invest in bitcoin, look carefully at this chart showing the company’s stock price history. The blue vertical line marks the day he made his first BTC purchase:
Microstrategy stock chart. Source: TradingView
Another company that has had a significant impact on the state of bitcoin is Tesla. In early February 2021, the electric car maker Reported told the US Securities and Exchange Commission (SEC) that it had purchased the cryptocurrency for $1.5 billion. The market reaction to Tesla’s decision can be seen on this BTC chart:
bitcoin chart. The blue vertical line marks the day Tesla’s report was published, which contained information about the company’s $1.5 billion purchase of BTC. The pink oval after the news release shows the movement of bitcoin. (source: TradingView)
interesting fact! In early March 2021, analysts at Piplase released a study showing that nearly 40% of US investors are guided by Tesla founder Elon Musk’s tweets when making investment decisions.
Given the belief that many market participants have placed in the developer, it is not surprising that the exchange rate of the cryptocurrency soared after his company representatives announced their BTC purchase.
Microstrategy and Tesla’s decision to invest in cryptocurrency has prompted many other organizations to quickly adjust their investment strategies. Here are some examples:
- As of early December 2020, MassMutual, the oldest insurance company in the United States, Bought $100 million worth of BTC.
- In early March 2021, Altshuler Shaham, a large Israeli pension fund, invested $100 million in bitcoin. This information came out in the media.
- In early April 2021, Meitu, a Chinese technology developer, Increased Its investment in cryptocurrency is $100 million. In total, the company had 940 BTC at its disposal. MeToo’s $100 million crypto portfolio includes 31,000 Ethereum, the second largest cryptocurrency by capitalization.
- In late April 2021, Nexon, a major Japanese video game developer, Bought $100 million worth of BTC.
- In the first days of May 2021, Latin American e-commerce company MercadoLibre, Spent $7.8 million on BTC.
It is very likely that members of the crypto community will hear frequently about cryptocurrency purchases made by large companies in the future.
Is it worth taking an example from Tesla & Co.?
The fact that large companies have started investing in bitcoin can be seen as an expression of confidence in the new financial instrument, making it more attractive to market participants. This change in the status of cryptocurrencies can be used to make a profit.
The last halving of bitcoin took place in May 2020. Many members of the crypto community believe that this digital asset will be able to break the $100,000 mark within the current development cycle. This possibility is confirmed by estimates from the BTC forecast model developed by the popular analyst PlanB Project, which takes into account bitcoin mining speed, the effect of halvings, and bitcoin movement patterns over the past period.
PlanB believes that the BTC price drop at the end of May 2021 represents a great opportunity to buy Bitcoin at an attractive price.
#bitcoin S2F oscillates in the dark blue band around the model value. Buying opportunities are scarce as of today (Q1 2019 when I wrote the S2F article, March 2020 due to covid, and now). Life is all about choices. https://t.co/rlb5dsIFSg pic.twitter.com/rQpTvzR3eW
– PlanB (@100 trillionUSD) May 22, 2021
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Image by Sharon McCutcheon from Pixabay