Data Suggests Institutional Investors Will Continue Buying Bitcoin’s Price Dips

September 23, 2020

It appears MicroStrategy Inc. is at the forefront of a growing trend according to a report by crypto asset insurance company, Evertas. The report concludes that more and more institutional investors will continue to pour money into Bitcoin and other crypto assets whenever the crypto market goes through a significant price dip.

 

More Details on the Bitcoin Price Dip Survey

Evartas’ survey considers the feedback of 50 different institutional investing firms from the United States and the United Kingdom. Together, these firms manage an estimated $78 billion USD in capital. To put that into perspective, Bitcoin is trading at around $14,000 Canadian or $260 billion right now. If each one of these 50 institutional firms put all of the wealth they manage into Bitcoin, it means Bitcoin’s price would increase by close to 35%.

As the survey reveals, more than 25% of respondents believe pension funds, family offices, insurers and sovereign wealth funds will significantly increase their crypto holdings. 32% of respondents say that they expect major hedge funds to get heavily involved in the near and distant future as well.

 

The Key Question Institutional Investors Still Have about Cryptocurrencies

The CEO of Evartas points out one thing about his company’s report that many people in the crypto space are already aware of. That’s the fact that many aspects of the innovation surrounding cryptocurrencies still need to come to fruition.

Working on improving scalability and transaction speed is one thing. That’s something members of the developer community can continue to work on regardless of whether or not institutional investors get involved. But how this affects institutional investment is that institutional on-ramps providing access to large amounts of liquidity for these firms are still not the greatest at facilitating such transactions.

Keep in mind that as a retail investor when you buy $10,000 worth of Bitcoin, you can easily find a seller willing to match your market order. However, when you’re trying to buy $1 billion worth of Bitcoin at a time, it’s difficult to get that amount of Bitcoin in one shot. This means you have to keep finding sellers to give you their Bitcoin and that means they can raise the price.

Essentially what that means is that at the present moment, an institutional investor actually raises the cost of their own purchase simply because the liquidity isn’t available. This means they are effectively losing money because they’re paying more for an asset than it is currently worth. This concept is referred to as slippage.

The bottom line is, it’s clear that institutional investors will continue to buy heavily into Bitcoin and cryptocurrency, and you the retail investor probably will too. It’s only a matter of time.

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