More and more institutions are investing in Bitcoin, with the most famous company to do this being Tesla. The news of this move into Bitcoin by big-time institutional investors has, naturally, added fire to the crypto market, leading to what experts are calling the biggest crypto bull run since 2017.
In particular, Tesla’s Bitcoin investment of $1.5 billion has caused an unprecedented increase in the retail interest in Bitcoin. More importantly, it has pushed the price of Bitcoin to an all-time high.
According to CoinShares, inflow into the crypto market as of January 2021 hit $1.3 billion. And much of this success has to do with companies stockpiling bitcoin, for some as a reserve asset, and for others, as funds on behalf of their investors.
Bitwise 10 Crypto Index Fund – 11,500 BTC
This company was launched late last year to become the first publicly traded crypto index fund in the United States. The company keeps tabs on 10 of the largest cryptocurrencies and allows investors buy shares that represent these digital currencies.
Of all the company’s products, its fund is the product with the strongest demand. In fact, nearly 75% of the company’s assets are in Bitcoin and the Fund currently manages around 11,500 Bitcoin which is worth more than half a billion dollars.
The CEO of Bitwise, Matthew Hougan has mentioned that he has a vision for the fund to become the S&P 500 or the FTSE 100 of the crypto space. He explains that wealth management is a goldmine in the cryptocurrency space that has remained largely untapped. And so, the company will be exploring this niche with its products specifically designed to serve this need.
iQ The Bitcoin Fund – 23,000 BTC
3iQ is a Canada-based crypto-asset portfolio manager. Right now, the company holds close to 23,000 BTC which is worth more than a billion dollars.
The company got listed on the Toronto Stock Exchange in April of 2020, making it the first public bitcoin fund to be listed on a major global stock exchange. By reason of this announcement, therefore, Canadians can now invest in Bitcoin through regulated investment managers.
Later last year, 3iQ also got listed on the Gibraltar Stock Exchange in what Fred Pye, 3iQ’s President, explained as a move to make the company the biggest regulated Bitcoin fund in the world.
Ruffer Investment Company – 45,000 BTC
Alright, we move to the 6th company on our list, Ruffer Investment Company.
Ruffer Investment is a company based in London and one of the newest members of the Bitcoin family.
The company invested 2.5% of its Multi-Strategies Fund in Bitcoin in December of 2020. According to the company, this investment decision will insure the company against the continued devaluation of the world’s major currencies.
As it turns out, this bet is paying off. At the time of purchase, Ruffer’s 45,000 BTC was worth an estimated $870 million. However, right now, it’s now worth more than $2 billion.
CoinShares -70,000 BTC
CoinShares is widely respected as a first-mover in the cryptocurrency industry. It was also the first company to launch an exchange-traded Bitcoin product as well as a regulated Bitcoin hedge fund.
As of last month, the amount of Bitcoin CoinShares had under management totaled nearly 70,000 BTC which currently values at a little over $3.2 billion.
Though CoinShare’s investment isn’t nearly as staggering as Grayscale’s, it is still very impressive. CoinShare’s Bitcoin stakes currently account for more than 0.3% of the total amount of Bitcoin in circulation.
In a recent press release, Jean-Marie Mognetti, CoinShares’ CEO, has been quoted as saying that “investors used to consider it a risk to allocate to Bitcoin. Now it’s a risk not to allocate to Bitcoin.”
Galaxy Digital Holdings – 16,400 BTC
Galaxy Digital Holdings is a merchant bank that focuses on the cryptomarket. According to bitcointreasuries.org, the company currently holds about 16,400 BTC which at the current prices translates to about $770 million.
The company was founded in January 2018 by Michael Novogratz and has since then partnered with major crypto firms like BlockFi and Block.one. So, it’s not surprising that Novogratz advocates aggressively for Bitcoin.
April last year, Novogratz pointed out that interest in cryptocurrencies was increasing following the stimulus measures announced in response to the coronavirus pandemic. He called it the Bitcoin moment even as he argued that money doesn’t grow on trees, obviously taking a jab at fiat currency.
However, as the year progressed, Novogratz seemed to begin to take a different standpoint from the one he took at the beginning of the year. Toward the end of 2020, he argued that gold was a safer bet for investment right now considering how volatile cryptocurrencies currently are.
He still believes that Bitcoin outperforms gold by a wide gap. All the same, he advises potential investors to hold more gold than bitcoin due to the volatility of the online asset.
Tesla – 42,902 BTC
On the 8th of February 2021, Tesla publicly announced that they had invested an aggregate of $1.5 billion in bitcoin through an SEC filing. This sum amounts to roughly 8% of Tesla’s $19 billion cash holdings as of the fourth quarter of 2020.
According to the SEC filing, Tesla bought Bitcoin as a way to diversify cash at hand and maximize returns. The company has also stated that it will begin to accept Bitcoin as a means of payment in the near future. As such the question in everyone’s mind is whether Tesla will liquidate the bitcoin after receiving payment or whether it will continue to hold the token.
The company’s move to invest in Bitcoin didn’t exactly come as a shock considering how much Elon Musk has flirted with Bitcoin in the past. Tesla’s CEO has been open about his support for Bitcoin and even Dogecoin, adding the Bitcoin hashtag to his Twitter profile last month. Plus, in late 2020, Microstrategy’s CEO, Saylor, suggested investing in Bitcoin to Musk, explaining that it would do Tesla’s shareholders a $100 billion favor, even going further to offer to share his playbook with Musk.
Anyway, there’s something interesting to note about Tesla’s investment in Bitcoin. By accounting rules, Tesla will not be able to record any increase in the value of its bitcoin investment except it sells all of its stake, or, at least, a part of it. It does, however, have to record any decline should Bitcoin fall, whether or not the company chooses to sell some or all of its stakes.
Now, since Tesla intends to hold Bitcoin for a long time, the company has since cautioned in its SEC filing that its profitability might be negatively impacted for a while.
MicroStrategy -124,391 BTC
Microstrategy is a business analytics platform, one of the biggest in the world actually, that produces cloud-based services and mobile software.
Of all the companies currently invested in Bitcoin, MicroStrategy is the largest aggregate buyer of the token. And according to the company’s SEC filing from March 1, the company has spent around $2 billion dollars in its Bitcoin buying spree. The company currently holds about 124,391 Bitcoin in reserve.
The CEO of Microstrategy has also invested personally in bitcoin and has been pretty vocal about it, compared to other CEOs who are typically reticent when it comes to their personal investments. Saylor has publicly announced that he holds close to 18,000 BTC personally which converts to more than $800 million. This places Saylor on the list of the top 100 Bitcoin owners, that is, if all the bitcoin is registered to one address.
Microstrategy did mention in 2020 that it was looking to get other companies to invest in Bitcoin. Last year, in February, the company hosted a Bitcoin for Corporations segment during its World Now Conference. Microstrategy created the segment in a bid to get companies up-to-date on all things Bitcoin.
In that conference, Michael Saylor predicted that an, in his words, “avalanche of companies” would be converting a part of their balance sheets into Bitcoin in the coming year. A prediction which looks to be coming through.
Still, not everyone shares the same view as Saylor when it comes to the digital token.
There are those who feel really concerned that MicroStrategy used close to $2 billion of convertible debt to finance their purchase of bitcoin. Taking out debt to buy an unreliable asset is, understandably, worrisome. But, according to Saylor, Bitcoin is infinitely more promising to invest in than other assets, even gold. In his words, “if you’re looking for a non-fiat derivatives store of value in an inflationary environment, that’s logical that you would settle upon Bitcoin as digital gold.”
Grayscale Bitcoin Trust – 643,801 BTC
Grayscale Bitcoin Trust is, without doubt, one of the biggest names in the Bitcoin community and it’s not for nothing. Compared to all institutions with an investment in Bitcoin, Grayscale has the largest Bitcoin portfolio by far. We’re talking about more than $30 billion dollars in Bitcoin managed by Grayscale Bitcoin Trust. It’s massive!
In fact, as of today, Grayscale holds around 650,000 BTC which accounts for over 3% of the total Bitcoin supply. If that isn’t staggering, we don’t know what is.