Institutional Bitcoin Holders: Are Corporates Panicking over Price Crash?

Bitcoin, a cryptocurrency that started from nothing and reached a market cap of more than $1 trillion in just 12 years, has witnessed a significant jump in institutional interest in the last few years. Companies like MicroStrategy, Tesla, Galaxy Digital, Voyager Digital and Block have acquired the world’s largest cryptocurrency in large amounts.

However, the debacle of the Luna Foundation, once known as a prominent institutional holder of Bitcoin, has fueled uncertainty across the crypto market which was already fighting a major correction. Since November last year, Bitcoin has lost more than 55% of its value. So, is it all over regarding institutional BTC interest?

Perhaps not. According to CoinGecko, public listed companies around the world hold more than 225,000 Bitcoin. MicroStrategy alone holds over 129,000 BTC worth almost $3.7 billion. Analysts believe that institutional sentiment is different from retail. Even in the toughest of market conditions, during the past couple of years, when retail traders dumped the world’s largest crypto asset, institutional holders like MicroStrategy and Block bought the dip to hold Bitcoin for the long term.

“Companies like MicroStrategy will hold regardless of price and may even try and add to their reserves, but companies engaged in short-term trading or measuring profits and returns in fiat terms will simply try to use volatility to generate them,” Jason Deane, an Analyst at Quantum Economics, said.

Long-Term Sentiment

Even during the recent market correction, institutional investors held on to their digital assets. Most of the institutional investors accumulated Bitcoin below $30,000. However, some are facing huge unrealized losses due to BTC’s dip below $28,000.

According to Marc P. Bernegger, the Co-Founder of the Crypto Fund AltAlpha Digital, as long as Bitcoin holds on to the current price levels, institutional sentiment will remain positive due to the long-term strategy of corporates.

“Most corporates have a long-term target after investing in Bitcoin. As long as BTC doesn‘t fall further, the long-term sentiment still stays rather positive as markets are in turmoil in general,” Bernegger said.

Here to Stay

Deane said that the recent crash in Bitcoin and other digital assets has sparked discussions in the Board rooms of the companies holding the digital assets. However, institutional interest in Bitcoin will remain intact.

“While short-term strategies may vary, institutional involvement in Bitcoin is here to stay,” the Analyst at Quantum Economics, said.

“While we've witnessed a recent drop in the price of bitcoin and other digital tokens you have to recognize just how far the space has come over the past few years. Institutional investors are mindful that crypto is an asset class that is here to stay, and capital continues to flow into the space,” the Market Analysis Team at Bitfinex mentioned in a recent email to Finance Magnates.

An Opportunity?

Analysts believe that Bitcoin’s current price range is very sensitive to a ‘make or break situation’. A dip below $20,000 will spread enormous panic among even the long-term institutional holders. However, its current price has been termed by them as an ‘attractive level’ for finding new buying opportunities in the market.

Del Wang, the CEO of Babel Finance, said that the current bear market may present different opportunities for long-term institutional buyers.

“Based on our relationships with institutional and ultra-high-net-worth investors, we can see that most are long-term in their outlook, meaning the current bear market may present opportunities for them. Babel Finance has long held to the belief that cryptocurrencies, as well as the underlying blockchain technology, have the potential to revolutionize the financial system as we currently know it,” Wang commented.