BlogInstitutional investors and Bitcoin in 2024
The significance of Bitcoin reaching $100,000 is symbolic. From the point of Bitcoin's long-term development, it might be regarded as small number, especially compared to the future price levels that it is expected to achieve in the coming years. As we know, the total number of Bitcoins that can be mined is limited to 21 million. It's expected that by the year 2140, all the bitcoins that will ever exist will be available, with more than 90% of bitcoins already mined by now. When Bitcoin came into existence in 2009, miners received 50 BTC for each block they mined. The latest halving happened on April 19, 2024, and the miners' rewards for each block were lowered to 3.125 BTC.
Institutional investors and corporations have started to have an increasing exposure to Bitcoin since Bitcoin ETFs have been approved. The 2017 Bitcoin bull market was mostly supported by retail investors. The 2021 rally received some attention from major companies like Tesla, MicroStrategy, SpaceX, GrayScale, and Square. However, other institutional investors still held a cautious attitude. These companies have special teams that must follow important rules, and many funds have their own rules that stop them from investing in certain products.
But, in January 2024, the Bitcoin investment proposition dramatically changed for big investors when the US Securities and Exchange Commission allowed spot Bitcoin exchange-traded funds (ETFs). While other countries, like nearby Canada, allowed these ETFs a long time ago, the US financial markets possess the required financial depth. In addition, companies with exposure to Bitcoin, including Coinbase and MicroStrategy, have seen their stock market price skyrocket in the past few years.
According to a research report by River, as of August 2024, businesses represent a large and growing segment of Bitcoin users, accounting for 3.3% of Bitcoinʼs total supply, or 683,332 BTC. The number of publicly traded companies with Bitcoin holdings grew by 40% from September 2023 to August 2024. Bitcoinʼs primary business use case is as a treasury holding, but it is also used for cross-border bitcoin payments, wage payments and commerce payments. As of November 2024, the companies with top 5 Bitcoin holdings are MicroStrategy (386,700 BTC), Marathon Digital (25,945 BTC), Riot Platforms (10,019 BTC), Tesla (9,720 BTC) and Hut 8 Mining (9,109 BTC).
MicroStrategy, led by Michael Saylor, has extended its Bitcoin reserves recently, acquiring 21,550 more BTC, bringing its add up to to 423,650 Bitcoins in total. This move positions MicroStrategy as one of the biggest corporate holders of Bitcoin. As of December 2024, investment giant Blackrock has also accumulated Bitcoin worth 400M USD thanks to Bitcoin ETFs.
The institutionalization of Bitcoin and the broader cryptocurrency showcase means a development phase that leads to more broad appropriation and acknowledgment. As regulators in more jurisdictions start taking a closer look at supervising the industry, institutional investors will make decisions for the benefit of their shareholders and in full compliance with regulations.
