Bitcoin: The new goldmine for investors in times of crisis!

Bitcoin: The new goldmine for investors in times of crisis!

Bitcoin has evolved from a speculative investment into a serious financial instrument in recent years. The increase in acceptance among institutional investors and support from governments worldwide are contributing significantly to this change. Companies like MicroStrategy and Tesla are increasingly integrating Bitcoin into their financial strategies, signaling increased confidence in this digital currency. This development is supported by the launch of Bitcoin ETFs and the participation of major banks, making Bitcoin easier to access.

How IT Boltwise reports, Bitcoin is increasingly viewed as a safe investment, especially in times of economic uncertainty and high inflation. Geopolitical tensions and economic challenges also position Bitcoin as a hedge against currency devaluations. Countries like Taiwan are considering adding Bitcoin to their foreign exchange reserves, underscoring the cryptocurrency's global relevance.

Institutional investments and their influence

Institutional investors have played a significant role in Bitcoin's performance in recent years, although expected price increases have not always materialized as predicted. However, there has been a notable increase in holdings, with firms like MicroStrategy holding over 1% of the total Bitcoin supply. Other prominent investors include Marathon Digital, Galaxy Digital and Tesla, as well as international companies such as Nexon from Japan and Phoenix Digital Assets from the United Kingdom.

Together, these companies hold over 340,000 Bitcoin. Loud Bitcoin Magazine Bitcoin ETFs have attracted billions in investments in just a few months, accumulating over 91,000 Bitcoin. Private companies and ETFs control a total of about 1.24 million Bitcoin, which is about 6.29% of the total circulating supply.

Market dynamics and price development

Following the approval of Bitcoin ETFs in January, the price of Bitcoin rose from around $46,000, but experienced a decline immediately afterward before rising by around 60% in two months. This price movement directly correlates with institutional accumulation through ETFs. Should this demand continue, a sustained increase in Bitcoin prices is possible, provided these institutions are considered long-term buyers.

Much of the Bitcoin supply is currently illiquid; almost 75% of them have not moved for at least six months. This leads to higher volatility for the remaining circulating supply, which currently accounts for 25% of the total supply. The risk that institutional holdings, if sold, could trigger a market downturn leaves investors in a delicate balance.

Overall, increased institutional investment brings both positive aspects, such as legitimizing Bitcoin and injecting capital, as well as negative aspects, including increased volatility and greater risk of downward pressure on prices. These dynamics will continue to shape the perception and value of Bitcoin as an investment vehicle.