Institutions are buying Bitcoin despite extreme fear in the crypto market
Despite retail reluctance, major institutional investors, such as New York Digital Currency Group (NYDIG), are still betting on bitcoin.
NYDIG, one of the companies responsible for funding crypto miners during the 2021 bull run, recently raised $720 million from 59 investors for a product called the Institutional Bitcoin Fund. The company disclosed the information to the Securities and Exchange Commission in a filing on September 29, 2022. The company said its bitcoin balance reached an all-time high in Q3 2022.
On October 3, 2022, the company announced two new executives, Tejas Shah and Nate Conrad, who both come from Wall Street banking giant Goldman Sachs. Both were hired to run mining and payment operations, Bloomberg reported.
“When markets crumble, character emerges. A flight to quality by the most risk-aware institutional investors has relentlessly driven bitcoin and earnings to NYDIG over the past 12 months,” Ross Stevens stated in a company press release.
NYDIG’s fundraising comes with market in ‘extreme fear’
While testing for retail investors, the current bear market has proven to be an opportune time for institutional players to try their hand at crypto. The 2022 annual Global Hedge Fund Report from Big Four accounting firm PwC found that over a third of hedge funds have invested $4.1 billion in crypto, up 8% from 2021. Asset management giants Abrdn, BlackRock and Charles Schwab have also dipped the toes. in the pool, spurred in part by clients demanding exposure to the asset class. BlackRock recently announced a spot bitcoin private trust for its institutional clients.
“Our institutional clients are increasingly interested in gaining exposure to digital asset markets and are focused on how to effectively manage the operational lifecycle of these assets,” Joseph Chalom, a BlackRock executive, said in August 2022.
Business intelligence company MicroStrategy, while not new to the club of corporate bitcoin holders, recently scooped up 301 bitcoins to take its total holdings to nearly $4 billion.
Institutional investors, it seems, have come to terms with crypto’s inherent volatility and have invested in crypto as a long-term play. An example of this, NYDIG’s fundraising and Microstrategy’s purchase comes at a time when the crypto fear and greed index is planted firmly in the ‘extreme fear’ zone, describing much of the sentiment in the retail market.
Shopify CEO is bullish on Coinbase stock
The tanking crypto market has also proven to be an opportune time for wealthy individuals to invest in the space. Coinbase board member and Shopify CEO Tobias Lütke has spent $369,000 weekly on Coinbase stock since early August 2022, as Coinbase’s stock price struggles amid the current bear market. Coinbase’s share price, down more than 75% since the start of the year, often tracks bitcoin’s price.
Coinbase shares rose briefly after the partnership with BlackRock was announced in early August 2022. The partnership will give BlackRock’s institutional clients access to crypto.
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