A New Report Reveals Institutional Investors Hold $50 Billion in Bitcoin
According to a recent report by investment manager VanEck, institutional investors currently own around $50 billion worth of Bitcoin. These holdings are spread across various entities such as exchange-traded funds (ETFs), countries, and public and private companies. Interestingly, this comes at a time when investors are eagerly awaiting the approval of a spot Bitcoin ETF.
VanEck suggests that hedge funds and asset managers view Bitcoin as an effective portfolio diversifier due to its potential to hedge against inflation. The digital currency’s immutable transaction history makes it less susceptible to fraud compared to gold. Additionally, its divisibility into smaller units makes it a superior form of payment.
VanEck Claims Bitcoin Can Improve Returns with Minimal Downside
The investment firm also states that Bitcoin has the potential to improve returns without significant risk in portfolios. They recommend allocating 40% to bonds and 60% to equities. Furthermore, VanEck expects the price of Bitcoin to rise before and after the spring 2024 halving event, which reduces the amount of Bitcoin released for each mined block.
The Utility of Bitcoin Network Could Be Enhanced with RGB Layer 2 Upgrade
A new upgrade called Bitcoin RGB Layer 2 is set to enhance the utility of the network. It will enable investors to tokenize bonds and other assets using the existing structure of the Bitcoin network. This aligns with Citi’s prediction that asset tokenization in private markets like real estate will increase by 80 times by 2030.
Tokenization involves digitizing assets for exchange over the blockchain. While most projects have settled asset transfers on permissioned blockchains so far, VanEck believes tokenization on public networks like Bitcoin will become more prevalent.
Spot Bitcoin Approval May Threaten Futures ETFs
VanEck currently operates a Bitcoin futures-based exchange-traded fund with assets under management worth approximately $44 million. However, the US Securities and Exchange Commission has yet to approve a spot Bitcoin ETF. Analysts believe that a spot product, which offers direct exposure to Bitcoin, would be preferable for holding the digital currency over longer periods compared to a futures fund.
VanEck, along with other major players such as Fidelity, Invesco, Bitwise, and BlackRock, has applied to launch a spot Bitcoin ETF. If approved, this traditional ETF vehicle could attract significant investor inflows and potentially grow into a $100 billion market. It may also lead to outflows from futures-based funds that are less capital-efficient.
Hot Take: Institutional Investors Embrace Bitcoin as Market Readies for Spot ETF Approval
Institutional investors have shown growing interest in Bitcoin, with approximately $50 billion of the cryptocurrency currently held by these entities. The potential approval of a spot Bitcoin ETF is eagerly awaited by investors and could further fuel institutional investment in the digital asset. VanEck’s report highlights the benefits of Bitcoin as a portfolio diversifier and its potential for improving returns.
The upcoming halving event in 2024 is expected to drive the price of Bitcoin higher, while the RGB Layer 2 upgrade aims to enhance the utility of the network through asset tokenization. However, the approval of a spot Bitcoin ETF may pose a threat to existing futures-based funds.
By
By
By
By