From November 20th Companies own around 842,229 BTC, or 4.54% of the current Bitcoin supply (BTC)according to the panel Clark moody and the data from Bitcointreasuries.org. That equates to a whopping $ 15.3 billion at a current price of $ 18,200.
Public corporations and institutional investors are constantly hoarding Bitcoin. The spark that began with BTC’s ambitious $ 425 million purchase of MicroStrategy It has led to widespread institutional frenzy over the dominant cryptocurrency.
Why are institutions and companies buying Bitcoin now?
Business and institutional demand for Bitcoin is likely due to its growing reputation as a digital store of value.
Bitcoin is unique in that it can hedge portfolios against inflation like gold. but it has the potential to see exponential growth. Hedging assets often stagnate and show low volatility over time. They are intended to serve as insurance for a diversified portfolio so that the portfolio is protected when the market falls.
Bitcoin achieves both; It can act as a hedge investment, exposing investors to great long-term growth potential.
As, Michael Saylor, CEO of MicroStrategy, said that Bitcoin should not be viewed as a payment network or currency. BTC is very convincing as a store of value, which does not bring it into the crossfire of the regulatory authorities. Regarding the interview with the President of the US Securities and Exchange Commission (SEC), Jay Claytonsaid that BTC is not a security, Saylor said:
“That’s why #Bitcoin shouldn’t be a currency or a payment network. The principles of humility and harmony dictate that we must allow technology partners to make payments and defer governments on currency issues. $ BTC is a purely designed store of value. “
As long as the perception of Bitcoin by institutions and companies as an established store of value is maintained, The demand for BTC is likely to remain high.
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Companies now own about 4.5% of the current Bitcoin supplyThat’s around 18.5 million BTC. That percentage is relatively high when you consider that BTC has a fixed total supply of 21 million.
When missing or inactive coins are factored in, the total supply is estimated at around 17 million.
Companies like MicroStrategy that are buying bitcoin as a treasury asset are particularly bullish as it shows they don’t expect short-term returns.
When companies hold BTC with a low time preference, This would also result in less selling pressure over time if the available supply were reduced.
For example, on Aug. 11, when MicroStrategy announced the first purchase of $ 250 million in Bitcoin, Saylor said:
“MicroStrategy has recognized Bitcoin as a legitimate asset that can outperform cash, and has consequently made Bitcoin the primary stake in its treasury reserve strategy.”
The inflation outlook and constant injections of liquidity from central banks continue to fuel the medium and long-term outlook for BitcoinSome analysts think BTC is the perfect environment to shine over time.
In order to offset the negative economic effects of the pandemic on the financial market, the regulators are continuing to create loose financial conditions. For stores of value like gold and bitcoin, this trend is beneficial until 2021.