Has Bitcoin Achieved Mainstream Institutional Adoption?
Bitcoin is going mainstream and it’s gaining more momentum when it comes to institutional and retail adoption.
Bitcoin is going mainstream. Early adopters and longtime Bitcoiners have already believed this to be true for several years now. Now though, there is little doubt that bitcoin has at least started achieving significant mainstream institutional adoption.
Mainstream institutional adoption is pivotal for the future of both bitcoin and the crypto industry as a whole.
Companies Hold $15.3 Billion in Bitcoin
Corporations are betting big on bitcoin. Many notable CEOs, such as Jack Dorsey, have been bitcoin advocates for years. 2020, however, has witnessed a changeover from just notable individual supporters to now also corporations diving head first into the space.
MicroStrategy leads the charge. CEO Michael Saylor has been outspoken about their bitcoin accumulation. MicroStrategy now holds $425 million in BTC. It started with an initial purchase of $250 million and the floods gates opened from there.
Corporations are acknowledging the long term benefits of holding bitcoin over cash. They’re starting to see bitcoin more and more as a legitimate store of value asset that can be used effectively as an alternative reserve currency.
Coinbase Has $20+ Billion AUM
Cryptocurrency exchange powerhouse, Coinbase, now totals over $20 billion assets under management and counting. They’ve pulled in over $14 billion in institutional assets since April this year alone.
Other Notable BTC Buyers
- Grayscale Investments has $7.6+ billion AUM
- MicroStrategy has $425 million in BTC
- Jack Dorsey’s Square has $50 million in BTC
Coinbase’s $20+ billion is institutional assets under custody. Their growth further strengthens the exchange’s creditability in terms of compliance and simply as a place for institutions to turn to if they’re considering getting into cryptocurrency.
Brett Tejpaul is the head of institutional coverage at Coinbase. He comes from a traditional banking background, having worked at both J.P. Morgan Chase and Barclays Investment Bank.
PayPal and Square Buying Crypto
PayPal has entered the cryptocurrency space, allowing users to buy, sell, and hold crypto within their platform. More features are expected to rollout over time and they will eventually enable access to these features worldwide.
The payment transfer giant will also “enable cryptocurrency as a funding source for digital commerce at its 26 million merchants.” — PayPal
What happens when someone like PayPal enters the cryptocurrency space? More people buy bitcoin. Investment firm Pantera Capital estimates that PayPal is already buying close to 70% of the new supply of bitcoins.
PayPal increased their weekly crypto purchase limits from $10,000 to $20,000. The demand for bitcoin and crypto is there. That means, however, that the supply is shrinking.
Square and their Cash App also made waves in the retail space when they enabled automatic bitcoin purchases. Pantera estimates that almost 30% of newly minted bitcoins are accounted for via Cash App purchases.
According to Pantera, Square and PayPal account for nearly all newly minted bitcoins right now. With this year’s halving cutting down the bitcoin mining reward to just 6.25 new BTC every 10 minutes, the reality of supply and demand as a price driver is undeniable.
Institutional and Retail Impact on Price
In short, more institutional and retail interest means more buying. This leads to a smaller supply of bitcoin. Supply vs. demand would then dictate that this leads to higher prices.
There’s only so many newly mined bitcoins to go around at the end of each day. It comes as no surprise that, with renewed institutional interest in crypto and retail giants enabling it, we are seeing prices near all time highs.
Here are some price predictions for bitcoin in the coming year. Many of these were initiated prior to the bulk of the 2020 institutional adoption. Recent news and action will likely make these predictions even more bullish.
2021 Bitcoin Price Predictions
- Stock-to-flow puts BTC at $100K by August 2021
- Bitcoin bulls see potential for $300K in 2021
- Winklevii make case for $500K
- Bitcoin to $1 million? Some think so.
What’s Next for Institutions?
The current influx of institutional money into crypto is great for the industry as a whole. It will likely only continue. Where is there room for more growth and improvement though?
Recent companies and investment names putting bitcoin and crypto on their books are still those most familiar with the space. The next “wave” of institutional money has to come from others who are the less likely to be interested in crypto.
Outsiders coming into the fold for practical reasons is the next game changer. It’s one thing for big tech, finance, and investments firms to be bullish on bitcoin. The industry now needs to further emphasize the benefits of cryptocurrency in a way that any company can understand.
Thanks for reading! I am not an investment or financial advisor. This is not financial advice. All opinions expressed are mine alone. If you want more content like this, sign up for my weekly email.