An important trend in the financial market ecosystem today is the investment of corporate or institutional investors in Bitcoin (BTC), which has had a huge impact on the global cryptocurrency market.
All focus on Bitcoin, not Altcoins
MicroStrategy CEO Michael Saylor explained to Bloomberg why companies are adding BTC to their balance sheets. MicroStrategy also acquired a digital asset worth up to $ 1 billion this week.
Saylor believes that diving into a leading cryptocurrency is the best alternative to hedge against the “impact of monetary inflation” that prevails in almost all economies today. He said:
“Traditional strategy of the Treasury no longer work for the preservation of shareholder value. Corporations need new ways to manage the dilutive effect of monetary inflation on their balance sheets. The best idea is Bitcoin.”
Although the inflation rate in the United States, for example, may be 2%, many analysts believe that this figure is only a mirror of what it really is. This has a huge impact on businesses around the world.
While Bitcoin is by far the most popular of all cryptocurrencies, with the trailblazer advantage, it should be noted that the cryptocurrency market comprises over 8,000 different digital currencies. While most of these coins have strong fundamentals and are futuristic, institutional investors are mostly focused on Bitcoin.
This is so because it is the first digital currency, and it forms the cradle and foundation on which other cryptocurrencies are built. It is the most recognizable, most widely distributed asset, and above all, it has the largest inflows by market capitalization, a condition that investors check before making a bet.
Bitcoin is reportedly struggling with one of the toughest weeks since the start of the current bull run, but Saylor, like other market bulls, believes that the inherent benefit of holding BTC will be more visible in the long run.
1% of the investment portfolio should be directed to BTC
Bitcoin has been touted as a hedge more than once, and it is increasingly being recognized as the ideal digital means of saving. Continuing the MicroStrategy strategy, JPMorgan experts recommend placing 1% of its investment portfolio in the MTC, as a way to insure against the instability of traditional asset classes, such as stocks, bonds and commodities.
Over the past year, Bitcoin has managed to grow fivefold, as waves of experienced investors such as Stan Druckenmiller, Michael Saylor and Elon Musk have backed the digital asset. Recently, Tesla’s purchase of $ 1.5 billion worth of Bitcoin caused the cryptocurrency to hit a new high of $ 58,000.
While JPMorgan strategists, including Joyce Chang and Amy Ho, have recommended allocating 1% of PTS in their portfolio, Fidelity Digital Assets experts have previously recommended that BTC make up 5% of the investment portfolio.
As market sentiment towards Bitcoin was upbeat, ARK Invest CEO Kathy Wood said in an interview with CNBC that if all institutions invested 10% of their money in Bitcoin, it could lead to a value of $ 200,000 per coin.