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The latest institutional interest in Bitcoin (BTC) has brought massive trading volumes to the asset class. As per fund managers of top financial institutions, Bitcoin is the third-most crowded trade after technology stock and shorting the U.S. Dollar.
Earlier this month, Bank of America conducted a poll between December 4 and December 10. Nearly 15% of the fund managers handling half-a-trillion-dollars of assets cited the recent popularity and surge in Bitcoin trades, reports Bloomberg.
New York-based crypto investment fund CoinFund makes an interesting observation. CoinFund managing partner Seth Ginns says that there’s massive interest from hedge funds to buy Bitcoins, off lately. Ginns expect this trend to continue further and lead to broader institutional adoption in 2021.
Ginns said that his office has received calls from endowments, pension plans, family offices, and foundations. During a webinar by Evercore ISI on Tuesday, December 15, Ginns noted:
Institutional giants are “laying out the groundwork for how you add Bitcoin to your balance sheet, how you should think about Bitcoin as a substitute for cash”.
Similarly, Chainalysis chief economist Philip Gradwell says that the market is majorly driven by institutional investors from North America. The largest money-rain in BTC has come from this region. Gradwell notes that in comparison to 2017, crypto exchanges are sending nearly 19% more transfers of $1 million and more in 2020.
The Institutional FOMO for Bitcoin (BTC)
The amount of institutional money entering Bitcoin (BTC) just continues to surge week-after-week over the last few months. The institutional frenzy has also triggered weekly inflows close to half-a-billion-dollars in recent times.
Giants like MicroStrategy continue to make massive Bitcoin investments while recently raising huge money by selling $650 million worth of convertible notes. On the other hand, traditional institutional giants like MassMutual recently announced a $100 million investment in Bitcoin through digital asset manager NYDIG. As per JPMorgan strategists, this institutional participation can lead to wider adoption ahead in the coming years.
JPMorgan expects that even if some of the biggest institutions put 1% of their reserve cash in Bitcoin, it can lead to an additional $600 billion worth of net inflows. Currently, Bitcoin (BTC) is trading around $19,300 levels and waiting to break through $20,000. However, investors need to maintain caution as whales are depositing massive BTCs to exchanges and could trigger a selling spree anytime to book profits.