Since you have clicked on the link to this article, I am going to assume that you are a Bitcoin investor or someone who likes to keep a keen eye on the crypto industry. If so, you already know how cryptocurrencies are on the verge of disrupting the conventional financial system.
When Bitcoins first came into the scene, the value of one Bitcoin was equal to $0.0008, and now as I am sharing this blog, the value of one Bitcoin is just a little under $35,000. If you want to buy Bitcoins, visit cryptotrader to know the details.
Even though Bitcoins are the most popular cryptocurrency, its problem is that it is very volatile; Bitcoins’ market value keeps changing every second, let alone every hour or day. This is what makes Bitcoins problematic while trading.
For investment, it turns out to be a very lucrative option, but it is not worth it as a digital currency. However, institutional investors are investing very heavily in cryptocurrencies.
How Are Institutional Investors Betting Big On Bitcoins?
According to the reports of Bloomberg, institutional investors are investing very heavily in cryptocurrencies. Hedge and endowments funds have been purchasing around $100,000,000 cryptos every month.
Back in the day, institutional investors kept a safe distance from cryptocurrencies purely because of their volatility. But since COVID 19 Cryptos are gaining a certain amount of stability as the dollars are weakening and the rising inflation in the US Economy has further added fuel to this trend.
If you are an alone crypto investor, it might actually be good for you.
5 Ways Institutional Investors Are Bringing Stability To Bitcoin Prices
Ever since institutional investors have started taking an interest, the prices of Bitcoins have started being stable.
- Generating Regulations by Bulk Purchase As institutional investors are showing interest in Bitcoins, more and more investors have started to invest in Bitcoins. If there are proper regulations within the crypto market, then it will be very lucrative for not only institutional investors but also lone investors. The institutional investors are in a way stabilizing Bitcoins by purchasing them in bulk. Rumors have it that the liquidity of Bitcoins might soon be compromised because of the participation of institutional investors. But the thing to note here is that the prices of Bitcoins have been quite stable despite the purchases in massive purchases.
- Providing Legitimacy Since institutional investors are investing huge amounts of Bitcoins, they are allowing for the fresh inflow of capital; this will set in motion further developments in the regulatory framework. All these factors are bound to have an effect on the legitimacy and adoption of Bitcoins as one of the prime digital payment methods. Apart from the acceptance of Bitcoins as a legitimate payment option, it will push the crypto market further.
- Proper Security One of the major reasons why people were hesitant to invest in cryptocurrencies is because of the lack of security. But since institutional investors have started to show interest in Bitcoins, the security measures are being taken properly. The past scenario was quite daunting; most of the crypto exchanges were not KYC verified. According to a report of Bloomberg, a whopping 68% of crypto exchanges were not KYC verified.
- Taking New initiative Ever since the institutional investors started betting big on Bitcoins, they have been closely working with the regulatory body to improve security and are on the verge of creating AML policies to favor both the buyer and the seller.
- Stabilizing The Market Financial experts are saying that institutional investors can, in fact, guide the present crypto market scenario as they hold major quantities of Bitcoins with very little to no price change. The reason for this is institutional investors are investing on behalf of their clients, which means they do not have the power to shift the market the way they like.
Final Thoughts
So above were the five ways how Institutional Investors Are Bringing Stability To Bitcoin Prices. Since I am an investor, all the things I mentioned in this article are true to my knowledge.