One Of Bitcoin’s Biggest Backers Just Spent $1 Billion Buying More

In this photo illustration a Bitcoin logo is seen displayed...

While bitcoin remains about 15% below its record high from Sunday, a couple of the cryptocurrency’s biggest corporate backers have doubled-down on their bitcoin investments during the recent correction despite concerns over the token’s unshakeable volatility.

Business analytics company MicroStrategy said Wednesday morning that it spent slightly more than $1 billion buying about 19,452 bitcoin tokens during the recent correction, averaging about $52,756 per bitcoin.

As of Wednesday, the firm, which used debt to finance its recent bitcoin acquisition, holds roughly 90,531 tokens that it purchased at a combined price of nearly $2.2 billion–less than half the $4.5 billion they’re worth at current prices.

In a statement, MicroStrategy ژEO Michael Saylor said acquiring and holding bitcoin remains one of the company’s two biggest strategic priorities (in addition to growing its analytics software business) and that the investment “reaffirms [the firm’s] belief that bitcoin, as the world’s most widely adopted cryptocurrency, can serve as a dependable store of value.”

The move comes less than a day after payments fintech Square, cofounded and led by billionaire Jack Dorsey, revealed it’s also doubled-down on its bitcoin investment–investing another $170 million in the cryptocurrency this month after a $50 million investment in October.

At current prices, Square’s October investment is worth approximately $230 million–more than four times the purchase price; combined with the recent purchase, bitcoin represents about 10% of the cash Square had on hand at the end of last year.

MicroStrategy shares have plummeted 42% since a nearly 20-year high on February 9–the day after Tesla disclosed a $1.5 billion bitcoin investment; much of the plunge has been fueled by crashing bitcoin prices, which have similarly tanked Tesla shares.

Crucial Quote

“Bitcoin is a bank in cyberspace for people that don’t have the ability to run their own hedge fund,” Saylor said on CNBC Tuesday. “It’s not a stock; it’s an asset class, and so if I put $1 billion into a bank, and then came back and put another $10 billion in a bank, the bank is not overvalued, it’s just 10 times bigger.”

Surprising Fact

Bitcoin has plummeted about 16% from its record high of more than $58,000 on Sunday, but it’s still up more than 400% in the past year.

Key Background

In addition to corporations bulking up their balance sheets with volatile bitcoin, institutional investors continue to bolster adoption in the space. This month alone, the first two bitcoin exchange-traded funds launched in Canada, BNY Mellon announced that its wealth management arm will process cryptocurrencies alongside stocks and bonds, and news broke that Morgan Stanley’s $150 billion investing arm is considering adding bitcoin to its portfolio.

Chief Critic

Bitcoin prices reversed a recent rally on Sunday after Tesla CEO Elon Musk tweeted that its prices seemed “a little high,” fueling concerns among experts that the token’s volatility makes it an unreliable store of value. “The fall that has taken place since [Musk’s tweet] shows just how wild an instrument bitcoin is, how overbought it has become and how influential the Tesla CEO now is in the space,” Oanda Senior Market Analyst Craig Erlam said Tuesday. “I’m not sure any of that is a good thing.”

genesis-3-1

Further Reading

Not Just Tesla: Big Institutions Keep Piling Into Bitcoin As Price Rockets Past $50,000 (Forbes)

Tesla Has Plunged 25% And Lost $200 Billion In Market Value Since Its Bitcoin Investment (Forbes)

Bitcoin Market Value Shoots Past $1 Trillion Amid Tesla-Fueled Surge (Forbes)

Bitcoin Soars To New High After Tesla Says It Invested $1.5 Billion (Forbes)

Follow me on Twitter. Send me a secure tip.

I’m a reporter at Forbes focusing on markets and finance. I graduated from the University of North Carolina at Chapel Hill, where I double-majored in business journalism and economics while working for UNC’s Kenan-Flagler Business School as a marketing and communications assistant. Before Forbes, I spent a summer reporting on the L.A. private sector for Los Angeles Business Journal and wrote about publicly traded North Carolina companies for NC Business News Wire. Reach out at jponciano@forbes.com.

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$8.7 Trillion Asset Manager BlackRock Is Exploring Bitcoin As Institutions Flood Crypto

Glowing dark background with bitcoin symbol.

Rick Rieder, BlackRock’s chief investment officer of global fixed income, told CNBC Wednesday that the investment giant has “started to dabble” in bitcoin—it’s the latest instance of a major financial player dipping its toes into digital assets.

Reider did not elaborate on BlackRock’s cryptocurrency strategy, but last month the investment giant filed documents with the Securities and Exchange Commission showing that it wants to include cash-settled Bitcoin futures as eligible investments for two of its funds.

BlackRock is the world’s largest asset manager—it managed some $8.7 trillion at the end of the fourth quarter.

Rieder told CNBC that he believes bitcoin’s recent rally is gaining momentum in part because of stronger regulations and better technology.

“My sense is the technology has evolved and the regulation has evolved to the point where a number of people find it should be part of the portfolio, so that’s what’s driving the price up,” he said.

Big Number

$51,000. That’s the new record price bitcoin hit early on Wednesday morning. The most popular cryptocurrency started the year with prices around $30,000.

Key Background

A spate of major corporations and financial institutions including MicroStrategy, BNY Mellon, and MasterCard,and PayPal have announced cryptocurrency initiatives this month, and there are reports that a $150 billion investment division at Morgan Stanley is considering investing in bitcoin. A portion of bitcoin’s recent gains are likely attributable to a surprise announcement from Tesla that the electric car maker had invested $1.5 billion into the cryptocurrency and has plans to start accepting it as payment.

Further Reading

BlackRock’s Rick Rieder says the world’s largest asset manager has ‘started to dabble’ in bitcoin (CNBC)

Not Just Tesla: Big Institutions Keep Piling Into Bitcoin As Price Rockets Past $50,000 (Forbes)

Bitcoin Soars To New High After Tesla Says It Invested $1.5 Billion (Forbes)

BlackRock Files To Add Bitcoin Futures To Funds (Forbes)

By: Sarah HansenSarah Hansen

 

 

Source: $8.7 Trillion Asset Manager BlackRock Is Exploring Bitcoin As Institutions Flood Crypto

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Bitcoin Surpasses $15,000 To Reach Fresh 2020 High

Bitcoin prices extended their recent gains today, continuing to rally and breaking through the $15,000 level to hit a new high for this year.The world’s most prominent digital currency reached $15,306.84 at 11:15 a.m. EST on CoinDesk.

At this point, the cryptocurrency was up close to 10% over roughly the last 24 hours, additional CoinDesk figures reveal.The digital asset has been enjoying a great run this year, climbing more than 200% after falling below $4,000 back in March.

Ed note: Investing in cryptocoins or tokens is highly speculative and the market is largely unregulated. Anyone considering it should be prepared to lose their entire investment.

Price Drivers

When explaining bitcoin’s latest price movements, analysts pointed to several variables, including uncertainty surrounding the U.S. election.

“Bitcoin has broken through the $15,000 mark,” causing it to reach a multi-year high, said Charles Hayter, cofounder and CEO of digital currency data platform CryptoCompare. Recommended For You

“The surge comes at a time when Europe enters its second lockdown, the dollar continues to weaken and stock markets are rallying on the back of the US presidential election.”John Todaro, director of institutional research for TradeBlock, pointed to similar variables when interpreting bitcoin’s latest gains.

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“Equity markets have likewise risen alongside bitcoin as expectations of increased fiscal stimulus have risen—increased stimulus will devalue the dollar but push up equities and bitcoin as was expected in the event of a Biden win,” he stated.

Joe DiPasquale, CEO of cryptocurrency hedge fund manager BitBull Capital, offered a different point of view, describing bullish sentiment as the main driver of the digital currency’s latest gains.

The Path To $20,000

Now that bitcoin has broken through $15,000, analysts have started eyeing the $20,000 price level, speculating on when the cryptocurrency will reach a fresh, all-time high.Denis Vinokourov, head of research for London-based digital asset firm Bequant, commented on this situation.

“Bitcoin continues to grind ever so higher and, while calls for a re-test of the all-time high continue to grow ever so louder, parabolic price runs are not necessarily what the market needs for growth to be sustainable,” he stated.

“A correction and capital rotation into mid and small-cap assets, at this stage, would prove healthy for the overall marketplace.”“However, given the aforementioned FOMO and growing demand from retail, most signs point to a further squeeze higher,” said Vinokourov.

“Thus, ultimately, all eyes are on the elusive $20,000 price level, with little price discovery data to note any key levels – resistance or otherwise.”

Disclosure: I own some bitcoin, bitcoin cash, litecoin, ether and EOS. Follow me on Twitter or LinkedIn.

Charles Bovaird

 Charles Bovaird

I am a financial writer and editor with strong knowledge of asset markets and investing concepts. Currently, I serve as VP of Content for financial services firm Quantum Economics. I have worked for financial institutions including State Street, Moody’s Analytics and Citizens Commercial Banking. An author of more than 500 publications, my work has appeared in mediums such as New York Post, Washington Post, Fortune, CoinDesk and Investopedia. Previously, I created all the industrial finance training for a company with more than 300 people. I have spoken at industry events across the world and delivered speeches on financial literacy for Mensa and Boston Rotaract. I currently hold Bitcoin, Bitcoin Cash, Litecoin, Ether and EOS.

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The Crypto Analyst

Bitcoin flew through $10,000 today and set a new high! When wondering how high BTC can go? I do a Bitcoin technical analysis to show where I think this Bitcoin price prediction can really go to in 2020. Don’t Forget To LIKE, COMMENT, And SUBSCRIBE! Discord: https://discord.gg/DxuatMP TA COURSE: https://www.udemy.com/user/the-crypto… Patreon: https://www.patreon.com/user?u=10921422 Donate: https://streamlabs.com/thecryptoanalyst Donate Bitcoin: 15BJPmtMDVZVvep238TrXtTdyvJFj5tXQ8 Instagram: https://www.instagram.com/thecryptoan… Twitter: https://twitter.com/ACryptoAnalyst?la… Coinbase: $10 of FREE BITCOIN After Signing Up And Buying At Least $100 – https://www.coinbase.com/join/5a3e068… Binance: $10 of FREE BITCOIN After Signing Up And Buying At Least $100 – https://www.binance.com/?ref=16926559

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Bitcoin Is Braced For A Near-$1 Billion Shock This Week

Bitcoin traders and investors have seen a return to volatility this month, with the bitcoin price suddenly dropping in early September.

The bitcoin price, which had broken $12,000 per bitcoin at the end of August, dropped to around $10,000 amid a broader market sell-off before somewhat rebounding.

This week, the bitcoin market is braced for almost half of nearly $2 billion worth of bitcoin options to expire—something that could bring a fresh wave of volatility.

Bitcoin open interest, effectively traders betting on what they expect the price of bitcoin to be, has climbed to $1.9 billion—around triple what it was just a few months ago, according to data from bitcoin and crypto analytics provider Skew, with some 47% of existing contracts due to expire this coming Friday.

The looming bitcoin options expiry could spark a fresh bout of price volatility. Previous large expiries have caused the market to “bounce quite aggressively,” according to some analysts.

When options expire, the trader that made the bet will either get a payout or lose their stake.

The bitcoin options market has swelled through 2020, led by Deribit, a Panama-based derivatives exchange, which accounts for the vast majority of the bitcoin options contracts.

Meanwhile, bitcoin market watchers have been buoyed recently by bitcoin’s bounce at the psychological $10,000 level.

bitcoin, bitcoin price, bitcoin options, chart

“Bitcoin has resisted the bears’ pressure below $10,000, saving itself from falling further towards $9,000 and below,” Alex Kuptsikevich, the FxPro senior financial analyst, said via email, adding the market is seeing “growing interest from institutional investors after some stagnation.”

“It is worth paying attention to the reduced volatility in bitcoin in recent days, along with cautious price growth. This is more akin to careful buying following the optimism of global markets, rather than going all-in on the prevailing optimism.”

Elsewhere, markets are nervously eyeing what has been called a second wave of coronavirus infections, with U.S. stock market futures pointing to a muted start to the week.

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Billy Bambrough

Billy Bambrough

I am a journalist with significant experience covering technology, finance, economics, and business around the world. As the founding editor of Verdict.co.uk I reported on how technology is changing business, political trends, and the latest culture and lifestyle. I have covered the rise of bitcoin and cryptocurrency since 2012 and have charted its emergence as a niche technology into the greatest threat to the established financial system the world has ever seen and the most important new technology since the internet itself. I have worked and written for CityAM, the Financial Times, and the New Statesman, amongst others. Follow me on Twitter @billybambrough or email me on billyATbillybambrough.com. Disclosure: I occasionally hold some small amount of bitcoin and other cryptocurrencies

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Rock Bottom Interest Rates Are Driving A Boom In Cryptocurrencies

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After a period of time where it seemed like cryptocurrencies and all financial products with a bit of risk were being shelved in favor of low-risk products such as holding cash or government bonds (specifically the US dollar and Treasuries), the actions of the Federal Reserve and other central banks have caused a roarback in equity markets — and a corresponding increase in cryptocurrency values.

Since March, 15th, 2020, when the Federal Reserve cuts rates to zero in an unscheduled rate cut, the S&P 500 had its best quarter since 1998 and bitcoin’s price, about to touch $5,000 USD around that time period, is now roaring back above the $10,000 USD mark.

Understanding the relationship between monetary policy and cryptocurrencies can be a bit tricky, but it’s a worthy exercise. As cryptocurrencies start taking on institutional speculation, their short-term price movements gyrate with the markets. Some of this has been plainly stated before and often observed: some institutional investors think of bitcoin as digital gold.

They’ll use bitcoin as a hedge against the inflation they think will result from excessive unconventional monetary policy. This was the explicit view of Paul Tudor Jones, the billionaire investor loading up on bitcoin.

In this reading, the actions of central banks help create demand for cryptocurrencies by creating the conditions (excessive money supply) wherein a certain class of institutional investors feels the need to hedge their wealth.

But structural changes in monetary policy implementation also auger surprising new developments and support for new cryptocurrencies in ways that go beyond the “cryptocurrency as hedge” narrative.

Witness the new trend of DeFi, decentralized finance companies that are largely behind the growth in ethereum demand as ethereum gets locked into new financial products. DeFi represents alternative financial solutions built on ethereum that are looking to augment or replace traditional loans.

Typically, there’s a “search for yield” that happens when there are very few options to yield money in deposits or low-risk products. DeFi, with interest rates that range as high as 100% annualized on stablecoins looks like a more attractive option than fiat banks that can offer flat ~1% at best.

Within that structure, it’s clear that there are nuances, and perhaps warnings — products that yield that high likely are pure arbitrage situations that might fade away at any time and they carry with them risks (such as exploits) that might be underaccounted for. Yet, even if there are a lot of question marks — there’s no doubt that coordinated monetary policy around the world is driving people to look for new companies and technologies such as DeFi — an important secondary consequence.

The amount of unprecedented monetary support has also created a short-term window for institutional investors to be able to enter cryptocurrencies. Grayscale Investments LLC attracted more than $900 million in the second quarter, which was double any amount it had ever raised before. Most of that interest was spurred by institutional investors, who were supported by monetary policy, and placed in a “search for yield” and hedge-seeking situation.

Some of that was due to arbitrage, but there’s no doubt that institutional investors that were battening down the hatches when COVID-19 lockdowns were happening are back as a force across a variety of economic investments — including cryptocurrencies.

Some of this institutional investment comes on the heels of leading figures in the industry looking for shelter during the largest monetary expansion in history. This helps accentuate this short-term trend, with institutional investors suddenly finding the context, the need and the support to start pouring into investment in cryptocurrencies.

Beyond these factors however, is the potential pending development of a digital dollar. This is not being pushed by monetary authorities, but rather heard in the fiscal halls of power in Congress. Yet, research in this area will spur interest in cryptocurrencies by confirming the digital ascendency of finance into retail cash — and creating a contrast and another item that might highlight cryptocurrency’s usefulness as a hedge.

It is, however, the greater retail adoption of bitcoin and cryptocurrencies that is more interesting than the short-term movements associated with institutional investors pushed by monetary policy in one way or another towards cryptocurrencies.

A new study from Cornerstone Advisors says that 15% of Americans now own some cryptocurrency, with about half of those having invested in the first six months of 2020, among unprecedented monetary policy changes and COVID-19. High income, millennials and Gen Xers were some of the groups spurring this growth. Americans who don’t hold cryptocurrencies and had no plans to do so thought their financial health stayed the same (55%) mostly while a plurality of those that currently hold cryptocurrencies thought that their financial health was much better (44%).

Cryptocurrencies are getting short-term boosts in pricing from a wave of institutional and retail investors with a variety of incentives, many of them brought on by the largest monetary expansion of our age. Some of those incentives are here for the long haul, as monetary authorities struggle with the short-term effects of the COVID-19 pandemic and the longer-haul efforts to fully recover economically. Monetary policy during COVID-19 is acting as a bridge to cryptocurrencies for many new institutional and retail investors skeptical of its effects — and perhaps an enduring reason to stay in the cryptocurrency ecosystem.

Follow me on Twitter.

I was one of the first writers in 2014 to write about the intersection of blockchain in remittance payments and drug policy with VentureBeat and TechCrunch. Since then, I’ve been an early long-term HODLer of Ethereum, and I’ve built several mini-projects with blockchain for fun. I’d like to learn as much as possible about our decentralized future while sharing that knowledge with you

Source: https://www.forbes.com

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