According to VanEck, institutional investors own approximately $50 billion worth of Bitcoin (BTC) spread across ETFs, countries, and companies. The investment fund confirms that Bitcoin improves portfolio profitability with minimal risk, anticipating an increase at the 2024 halving. VanEck, along with Fidelity, Invesco, Bitwise and BlackRock, await the approval of a Bitcoin spot ETF, which could create a $100 billion market.
Institutional investors are all those institutions that trade cryptocurrencies to gain profits. In most cases these are private institutions, but since 2021, with the adoption of Bitcoin as legal tender in El Salvador and the Central African Republic, public institutional investors are also joining.
Institutional investors are often called whales, as they have portfolios with a great value in cryptocurrencies and that move the “wave” or the trend. Buying a whale can drive up the price of a cryptocurrency in seconds and create FOMO, while a sell can cause a big drop and a lot of FUD.
A new report from investment manager VanEck claims that institutional investors own approximately $50 billion of the Bitcoin currently in circulation.
Holdings are spread across ETFs, countries, and public and private companies, even as investors await approval of a spot Bitcoin ETF.
VanEck: Bitcoin Can Improve Profitability with Minimal Downside
According to the investment firm, hedge funds and asset managers are beginning to view Bitcoin (BTC) as an effective portfolio diversifier due to its potential to hedge against inflation.
Unlike gold, Bitcoin’s immutable transaction history makes it less susceptible to fraud, while its ability to be broken down into smaller units makes it a superior form of payment.
VanEck also confirmed that Bitcoin improved returns without significant risk in the portfolios, with 40% allocated to bonds and 60% to stocks.
The company expects the asset’s price to rise before and after the spring 2024 halving, a process that reduces the amount of Bitcoin released for each successfully mined block. The new Bitcoin RGB Layer 2 update will improve the network’s utility by allowing investors to tokenize bonds and other assets using the existing Bitcoin network structure.
Earlier this year, Citi predicted that the tokenization of assets in private markets like real estate would increase 80-fold by 2030. Tokenization digitizes assets that buyers and sellers can exchange via blockchain.
So far, most projects have settled asset transfers through Blockchains, which are permissioned rather than public networks such as Bitcoin.
Bitcoin Timely Approval Could Threaten Futures ETFs
VanEck operates a Bitcoin futures-based exchange-traded fund with approximately $44 million in assets under management.
The US Securities and Exchange Commission has yet to approve a US BTC Spot ETF. Analysts believe that it will be preferable to a futures fund to hold Bitcoin for longer periods.
VanEck has joined several Wall Street heavyweights, including Fidelity, Invesco, Bitwise and BlackRock. The above have called for launching a Bitcoin spot ETF. Unlike the futures ETF, which tracks the prices of futures contracts linked to the price of Bitcoin, the spot product will give investors direct exposure to Bitcoin.
The proven ETF vehicle is likely to spark significant investor inflows that could see it reach a $100 billion market. It can also lead to outflows from futures-based funds, which are less capital efficient.
By Audy Castaneda
