Transaction activity in the institutional market is still much lower than that of cryptocurrency retail platforms such as Coinbase.
Original title: ” Surge in demand for Bitcoin institutions after micro-strategic investment of US$450 million ”
Written by: Joseph Young
This article is authorized to reprint from Longhhash to Chain Wen
A huge Bitcoin investment seems to be stimulating institutional demand for Bitcoin.
MicroStrategy has acquired 38,250 BTC since the beginning of August, a $1.5 billion business intelligence and cloud technology group listed on the Nasdaq. After the company actively acquired Bitcoin, the institutional activity of Bitcoin’s major markets surged.
For example, Bakkt, a bitcoin futures market operated by NYSE parent company ICE, set an all-time high trading volume on September 15. On the same day, Bakkt’s Bitcoin monthly futures facilitated 15,955 Bitcoin contracts, exceeding the previous record by 36%. Each Bakkt Bitcoin futures contract is equivalent to 1 BTC.
In recent weeks, the trading volume of LMAX Digital, another cryptocurrency exchange that mainly serves institutional investors, has also increased. According to Skew’s data, LMAX Digital’s daily processing capacity is approximately US$82.3 million, surpassing Bitstamp, Kraken and Gemini. Currently, Skew ranks LMAX Digital as the second largest Bitcoin spot market after Coinbase, indicating high institutional demand.
Over the same period, the asset management scale (AUM) of the cryptocurrency investment company Grayscale has also increased, and the company has obtained Bitcoin exposure through Grayscale Bitcoin Trust. On September 2, Grayscale CEO Barry Silbert mentioned that the company’s asset management scale has reached a record high: $6.3 billion.
The transaction volume of Bakkt, LMAX Digital, and Grayscale has increased simultaneously, indicating that after the micro-strategy bought bitcoin on a large scale, the overall demand for institutions has increased.
In the past two months, Microstrategy has invested $425 million to purchase 38,250 BTC, including handling fees and other expenses. The company initially announced the purchase of 21454 BTC on August 11, and at the same time disclosed its plan to use Bitcoin as the main treasury asset. On September 14, Michael Saylor, the CEO of MicroStrategy, once again revealed another Bitcoin investment:
“On September 14, 2020, MicroStrategy completed the acquisition of an additional 16,796 BTC with a total purchase price of US$175 million. So far, we have purchased a total of 38,250 BTC, with a total purchase price of US$425 million, including handling fees and other expenses.”
In this regard, Dan Tepiero, the co-founder of 10T Holdings, said that from a long-term perspective, other CFOs may follow suit:
“Today’s Michael Saylor of the Micro Strategy Company’s acquisition of Bitcoin should not be underestimated. The wording he used to explain the distribution is perfect. This kind of wording will also be understood and considered by CFOs of other companies. It has a landmark meaning. .”
Up to now, the trading activity in the institutional market is still much lower than the retail platform in the cryptocurrency market. Platforms like Coinbase Pro and Binance process billions of dollars in transaction volume every day.
However, as the needs of various platform institutions including Grayscale, Bakkt and LMAX Digital increase, the trading activity of institutions may be able to compete with the trading volume of retail platforms. From a long-term perspective, if bank-operated cryptocurrency custody services and Bitcoin funds emerge as expected, they may further boost institutional sentiment surrounding Bitcoin.
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