Institutions Rush To Buy Bitcoin As Mood Flips Positive – Grayscale CEO

3 years ago 166

Michael Sonnenshein, the Grayscale CEO, told CNBC that more institutional investors and tech leaders may follow Elon Musk into Bitcoin after Tesla’s $1.5 billion purchase. Sonnenshein mentioned that institutional demand for BTC has increased moving into 2021, after a record-breaking year that saw Grayscale’s assets under management (AUM) surged to new highs.

The CEO told CNBC’s Squawk Box on February 10 that the record inflows witnessed in 2020 have continued into this year. He believes that it is a sign that Bitcoin’s current upsurge may continue.

As opposed to narratives arising from government entities, Sonnenshein explained that regulation is not a worry for the would-be investors, most of whom, he alleged, are quite satisfied that adequate regulatory clarity has so far been provided. He added:

“Conversation point number one starts around regulatory concerns, and actually, a lot of those conversations are characterized by a lack of regulatory concerns. A lot of the folks making decisions around this realize how much regulatory clarity has been provided around this.”

In the same week that Tesla was discovered to have invested up to $1.5 billion into bitcoin, Sonnenshein stated that many of the institutional investors are now happy and ready to join the bitcoin market over time, instead of throwing all of their investment eggs into one basket.

“I think the second piece of the conversation is around sizing and timing. So you’re seeing corporations think about anywhere from, on the low end, 25 basis points, to, on the higher end, maybe 100 or 200 basis points over time. And they recognize that they don’t need to get invested all at once.”

Investment Diversification

In that context, Tesla recently invested about 770 basis points, or 7.7% of its gross cash holdings, into bitcoin. The CEO said that the investment method used by MicroStrategy might be more typical of the future buyers. MicroStrategy acquired $1 billion worth of bitcoin in 2020:

“They’ve seen other corporations like MicroStrategy legging into this trade over time, and they ultimately believe in the growth of this. So buying Bitcoin whether it’s here, ten percent higher, or ten percent lower, ultimately, is not going to matter if they think Bitcoin is going to have the type of growth they think it is going to have over time.”

Michael Sonnenshein believes that the question surrounding bitcoin is changing from ‘why?’ to ‘why not?’ as the leaders of some of the major tech companies like Twitter and Tesla dive into the crypto market. The CEO believes that more ‘visionaries’ will follow the lead by Elon Musk in acquiring Bitcoin. He stated:

“I wouldn’t be surprised to see there being almost some sort of a race now — you have Elon Musk, you have Michael Saylor, Jack Dorsey. You’re gonna see a lot of other visionary leaders in disruptive companies actually realizing that it’s really moved from ‘why’ to ‘why not’, and see which companies are next to get involved in having Bitcoin as part of their treasury program.”

Most of the signals seem good for 2021 and the Grayscale CEO says that institutional inflows have already gained momentum since the start of 2021. He concluded:

“If flows are any indication of investor interest on the heels of a record-breaking 2020, I’m very pleased to say, and encouraged that that momentum is not only continuing this year, but is actually accelerating. So we’re seeing very very sustained and growing demand from a lot of institutional players at the moment.”

Some people think that Apple and Microsoft will also invest in the bitcoin market which might push the crypto towards $100K.

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