Bitcoin’s status as a new asset class that offers reliable and notable gains in the traditional and institutional market has been steadily on the rise, and has taken some rather notable rises thanks to the likes of Paul Tudor Jones and MicroStrategy. The latter recently made the news by putting their spare capital— a sum of $450 million — into Bitcoin.
Investors in Bitcoin, especially institutional ones, have certainly heard about Bitcoin as an investment tool, but many of them are still keeping their eye on it rather than diving straight in. This is further highlighted by Tudor Jones saying he thinks it will be a top performing asset, but he will only invest two percent in it.
However, MicroStrategy’s CEO Michael Saylor says the Federal Reserve’s recent relaxing of its inflation policy is one of the factors that drove him to put the remainder of the enterprise-software maker’s cash into Bitcoin.
The decision by Saylor to invest a huge sum of money from his company into this asset has opened the doors somewhat for other institutional investors which were only just trickling into the digital asset.
Another reason there has been a growing interest in institutional investment in Bitcoin is also thanks to avenues like CME and Bakkt. And it is at Bakkt where the floodgates are opening after this move by Saylor.
Baakt, a futures market that operates with physically settled Bitcoin contracts, operated by the NYSE’s parent company, ICE, has seen rapid growth since MicroStrategy’s investment.
Baakt recorded an all-time high trading volume on September 15. Bakkt Bitcoin Monthly Futures facilitated 15,955 BTC contracts that day, surpassing the previous record-high by 36%. Each contract of Bakkt Bitcoin futures is equivalent to 1 BTC.
It is not only Baakt though as the volume on LMAX Digital, another cryptocurrency exchange which primarily serves institutional investors, has also increased in recent weeks.
LMAX Digital is processing around $84 million per day, outpacing some rather large cryptocurrency platforms such as Bitstamp, Kraken, and Gemini. Currently, LMAX Digital is rated the second biggest BTC spot market behind Coinbase, demonstrating high institutional demand.
Saylor leading the way
Bitcoin interest from major companies was always on the rise, but it has certainly taken off and it is occurrences like Saylor’s decision and Tudor Jones’ plans that have made many sit up and listen.
“On September 14, 2020, MicroStrategy completed its acquisition of 16,796 additional bitcoins at an aggregate purchase price of $175 million. To date, we have purchased a total of 38,250 bitcoins at an aggregate purchase price of $425 million, inclusive of fees and expenses,” Saylor explained.
Dan Tepiero, the co-founder of 10T Holdings, said other CFOs could follow suit in the longer term:
“Hard to understate the importance of the action today from Michael Saylor at MicroStrategy on Bitcoin. The language that he uses to describe the reason that he has made the allocation is flawless. Language that other corp CFOs will understand and now consider. Landmark.”