Bitcoin is still a young asset relative to more traditional assets such as bonds, commodities, and equities. That youth is one explanation for why it took large professional buyers, including institutional investors, some time to wade into the largest cryptocurrency, but that scenario is changing in earnest.
The batch of spot bitcoin exchange traded funds that debuted in the U.S. earlier this year are contributing mightily to institutional adoption of the digital currency. Still, other market participants are accumulating sizable bitcoin positions. Many with the intent of holding for the long-term or broadening usage of bitcoin.
Some firms dot the rosters of ETFs, such as the VanEck Digital Transformation ETF (DAPP). Think MicroStrategy (MSTR), which alone holds more than 1% of all available bitcoin. Others include bitcoin miners such as Galaxy Digital (GLXY) and Marathon Digital Holdings (MARA). Both of which are DAPP member firms. The point is that some large, well-known companies, including Tesla (TSLA), are major bitcoin owners. That could bode well for the asset’s long-term trajectory.
Putting Big Bitcoin Buying Into Context
The aforementioned debuts of spot bitcoin ETFs in the U.S. were added to the prior buying of digital currency by institutional investors, hedge funds, and corporations, including DAPP holdings. Today, a small group of companies, not including ETF issuers, own a significant chunk of currently existing bitcoin.
“In total, these companies hold over 340,000 bitcoin. However, the real game-changer has been the introduction of Bitcoin ETFs. Since their inception, these financial instruments have attracted billions of dollars in investments, accumulating over 91,000 bitcoin in just a few months. Together, private companies and ETFs control around 1.24 million bitcoin, representing about 6.29% of all circulating bitcoin,” reported Matt Crosby for Bitcoin Magazine.
That group of eight companies includes seven DAPP holdings, with Tesla being the exception. Two of the eight are Block (SQ) and Coinbase (COIN), which combine for over 15% of the ETF’s roster.
Indeed, bitcoin has declined in four of the past five weeks, but that’s a near-term view. Conversely, accumulation by many of the aforementioned firms and institutional players is often conducted with a long-term perspective, and investors should keep that in mind.
“The principle is straightforward: when a large portion of an asset’s supply is removed from active circulation, such as the nearly 75% of supply that hasn’t moved in at least six months as outlined by the HODL Waves, the price of the remaining circulating supply can be more volatile. Each dollar invested has a magnified impact on the overall market cap,” added Crosby.
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