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Corporates are getting into Crypto

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EC10 is a Crypto Asset (similar to Bitcoin) that represents the top 10 Cryptocurrencies in one index.

When you buy the EC10 token, you automatically have exposure to Bitcoin and the 9 other most prominent cryptocurrencies. One of the key drivers regarding the EasyEquities DCX partnership is “to enable DCX to concentrate on developing its resources and internal systems to such an extent that an offering will soon be made to other corporate entities and financial institutions wanting to get some exposure to crypto assets”.

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This did not come out of nowhere. In fact, corporate adoption of this asset class is receiving a lot of attention at the moment, if you know where to look.

Arguably the biggest supporter is the CEO of publicly traded MicroStrategy (MSTR) Michael Saylor. He states he started to feel like he was “sitting on a 500-lb block of ice” and how he came to Bitcoin as the solution. The block of ice being the companies reserve cash and how that was “melting” away because of inflation. MicroStrategy then converted a whopping $425 million of its assets into bitcoin.

“We feel pretty confident that Bitcoin is less risky than holding cash, less risky than holding gold”

Saylor was quite adamant that MicroStrategy would not be the last to adopt this strategy. He was right, his words were barely cold when Square, Inc. purchased 4,709 BTC at an aggregate purchase price of $50 million.

“Given the rapid evolution of cryptocurrency and unprecedented uncertainty from a macroeconomic and currency regime perspective, we believe now is the right time for us to expand our largely USD-denominated balance sheet and make a meaningful investment in bitcoin.”

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Hot on the heels of Square came the news of Stone Ridge Asset Management.

Stone Ridge Holdings Group revealed New York Digital Investment Group (NYDIG) is acting as custodian of 10,000+ of the parent company’s bitcoin, valued at $115 million at today’s price.

Why did Stone Ridge invest?

“We've seen a pretty dramatic acceleration in the count of institutional investors who want to participate in the market since March 2020,” “The macro backdrop against the public health backdrop has caused a lot of people to rethink their portfolio composition.”

As economies have been reeling from the effects of COVID, governments and central banks tried to offset the drop in activity by injecting them with billions of dollars.

Then there are at least 20 institutional investors that have filed paperwork with the SEC showing they invested in the Grayscale Bitcoin Trust (GBTC), a product of Barry Silbert’s New York-based Grayscale Investments, LLC.

In fact Grayscale recorded the largest ever quarterly inflows - over $1.0 billion in 3Q20 - making it the third consecutive record-breaking quarter. YTD investment into the Grayscale family of products has surpassed $2.4 billion. They stated over 17% of inflows into GBTC coming from new institutional investors in 3Q20. They currently sit with over $6 billion of crypto assets under management.

Is this increase in demand an isolated event? Will it stop here? We think it unlikely. Are you listening corporate SA?

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What about the supply side of the argument?

Bitcoin only has 21 million that will ever be available. There are approximately 18.4 million currently in circulation. Most recently, in May 2020, we experienced the latest Bitcoin halving which now sees 900 BTC per day released on the market.

One way to look at this is- demand is increasing significantly and the supply is constrained making Bitcoin more scarce. The end result being- prices to push higher.

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Any opinions, news, research, reports, analyses, prices, or other information contained within this research is provided by Earle Loxton, CEO of DCX Capital (Pty) Ltd as general market commentary, and does not constitute investment advice for the purposes of the Financial Advisory and Intermediary Services Act, 2002. First World Trader (Pty) Ltd t/a EasyEquities (“EasyEquities”) does not warrant the correctness, accuracy, timeliness, reliability or completeness of any information (i) contained within this research and (ii) received from third party data providers. You must rely solely upon your own judgment in all aspects of your investment and/or trading decisions and all investments and/or trades are made at your own risk. EasyEquities (including any of their employees) will not accept any liability for any direct or indirect loss or damage, including without limitation, any loss of profit, which may arise directly or indirectly from use of or reliance on the market commentary. The content contained within is subject to change at any time without notice.