When Bitcoin hit an all-time high of $ 17,000 in late 2017, the cryptocurrency made headlines across the media and financial magazines – but not for the right reasons. Analysts and major institutional figureheads the promising digital asset beaten up and ostracizedand called it a “scam” and “useless as a payment system”. Shortly thereafter, Bitcoin suffered a significant correction, with prices falling 70% in a single year. To retail investors, the warnings about dubious institutions and analysts they had previously ignored seemed truer than ever. One thing was certain even then: cryptocurrencies would never become mainstream without an institutional takeover.
Leading up to 2021, the same financial firms and institutions that once doubted Bitcoin are now the biggest supporters. Goldman Sachs, for example refused to recognize Bitcoin as a real asset class or suitable investment Now in 2017. Now the investment bank is supporting digital currency, recently reopened its Crypto Trading Desk and offering Bitcoin-based financial products to its own customers.
Another such example is Visa, whose The CEO claimed 3 years ago that Bitcoin was not a real payment systemHe was firm on his stance not to offer crypto on the payment giant’s platform. As luck would have it, Visa announced this this morning Cryptocurrency payments are accepted.
What exactly has changed? There are many underlying factors influencing the growing adoption of Bitcoin, but simply put, the cryptocurrency had matured sufficiently as an asset class. This is evident as growth-minded, high-risk companies like Tesla, MicroStrategy, and Square have now invested billions of their cash reserves in Bitcoin.
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Bitcoin’s current rally is largely due to institutional demand. However, as institutional inflows slow down, there is a growing need for a further influx of institutional buyers. Give governments. Earlier this month, Temasek, Singapore’s $ 306 billion sovereign wealth fund, announced that it had been investing in Bitcoin since 2018. Likewise, one of New Zealand’s largest pension funds announced that its traditionally conservative retirement portfolio is now 5% Bitcoin.
It is likely that there will be more to come. New York Digital Investment Group (NYDIG) CEO Robert Gutmann said more governments could try to invest in bitcoin through their sovereign wealth funds. NYDIG reportedly advised several sovereign wealth funds on potential Bitcoin investments.
Regardless of the recent price movement of Bitcoin, it is clear that the digital currency is becoming more and more accepted by all types of companies worldwide – from banks to fintech giants to sovereign wealth funds.
Featured image from UnSplash
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