Bitcoin Magazine: The Impact of Institutional Investors on Bitcoin

After years of speculation about institutional interest in bitcoin, the goal has been reached. The approval of bitcoin ETFs for trading earlier this year has made it easier for everyday investors to own it. And to own it in a conventional brokerage account for ease of mind.

Several companies have also become major holders of bitcoin. The cryptocurrency is volatile, but over time, it has offered better returns than cash and equivalents.

A handful of companies own over 340,000 bitcoin already, out of a maximum of 21 million.

The bitcoin ETFs, since their inception at the start of the year, have accumulated over 91,000 bitcoin. Combined, this is about 6.3% of bitcoin’s total supply.

Meanwhile, over 75% of circulating bitcoin has not moved between crypto wallets for at least six months. That suggests investors are looking for higher gains. It also means that institutional owners could impact as much as 25% of the circulating supply.

Some of those institutions are bitcoin miners, which need to sell off some of their mined bitcoin to continue operations.

So there’s a chance that the rising level of concentration at the corporate level could lead to higher market volatility. Especially if these institutions make large sales at once.

Over the longer-term, bitcoin’s rising use as a store of value will likely keep supply tight and keep prices pushing higher. But the asset will likely continue to remain volatile for the foreseeable future.

To read the full analysis, click here.