While bitcoin is trading around $39,000, institutional investment in cryptocurrencies increased by $109 million in the last week, according to the latest CoinShares report. There it is highlighted that this is the fifth week of incoming capital flows to cryptocurrencies, after three weeks in which BTC sales by investors predominated.
Despite the global macroeconomic climate given by Russia’s invasion of Ukraine (it is clear that, as happens in any war, stock markets go down and the general trend is to seek safe havens for value), a turning point can be detected in regarding the crypto economy, since institutional investors and large corporations have decided to adopt them, in a sustained manner, since 2020, and they do not stop doing so now.
In 2021 there was plenty of news about crypto investment by major players like PayPal, Mastercard, Tesla, MicroStrategy, Square and some of the most prestigious banks in the world. Considering only twenty-three companies, according to data provided by Trustnodes, an investment of a figure close to one million bitcoins was made in that year.
What impact does this corporate adoption have on cryptocurrencies?
First of all, it gives them a very important support and generates greater confidence in the general public, including, of course, SMEs. Second, it encourages companies with inefficient financial systems, where exposure to inflation is a problem, to use cryptocurrencies on a day-to-day basis and convert part of their currency funds to cryptocurrencies.
In Argentina, in particular, there are added difficulties to dollarize assets suffered by both SMEs and large companies. In this sense, cryptocurrencies can provide tools to help companies mitigate these obstacles in order to enable greater financial efficiency by making local pesos yield with liquid investments of immediate rescue, without minimums or limits, along with the possibility of dollarizing. those returns instantly without fees with DAI or other cryptocurrencies.
Gone are the days when cryptocurrencies were exclusively owned by risky individual investors. Today, many companies around the world use bitcoin and other cryptocurrencies so that their capital does not lose value and even becomes profitable, in addition to having a diversified investment portfolio. This logic finds reason in the monetary emissions of past years throughout the world (hence, inflationary peaks are seen in the United States, for example).
On February 1, 2022, MicroStrategy announced the purchase of 660 BTC. In this way, he already accumulates more than 125,000 bitcoins. According to Michael J. Saylor, CEO of the company, there are exactly 125,051 BTC, purchased at an average price of $30,200 per unit. About 3,776 million dollars invested in total. Thus, with the price of the cryptocurrency over 39,000 USD, the amount accumulated by MicroStrategy exceeds the market value of more than 4,700 million dollars. This equates to a 25% increase in the valuation of the portfolio in question on average.
Note also that when the company had a $5 billion investment in bitcoin as of May 2020, it communicated the following: “This investment reflects our belief that bitcoin, as the world’s most widely adopted cryptocurrency, it is a reliable store of value and an attractive investment asset with more long-term appreciation potential than holding cash.”
In a way, what Microstrategy said then is that it did not see why, in an inflationary environment, it should continue betting on dollars if the rates paid in that currency are zero.
Strategy
A study based on a survey carried out by Okta, conducted to learn how the world’s leading companies are transforming with technology, yielded significant information: 1,050 executives from different global industries with more than USD 1 billion were interviewed. income per year and more than 50 thousand employees. The result may surprise many, but not so much if what has been said so far is taken into account: 61% of the executives surveyed assured that the technology of crypto assets is among the investments of the digital transformation strategy of the organizations they represent.
Having done this brief tour, it can be concluded that investment in cryptocurrencies by financial institutions, large companies and SMEs is an irreversible habit in a robust crypto ecosystem, which offers solutions to specific problems. Experience indicates that including assets such as DAI in the financial strategy of SMEs helps to gain agility in environments where exposure to inflation is corrosive and costs for international transfers are very high.
Disclaimer: The information and/or opinions expressed in this article are the sole responsibility of Matías Alberti and do not necessarily represent the points of view or the editorial line of Cointelegraph. The information set forth herein should not be taken as financial advice or investment recommendation. All investment and commercial movement involve risks and it is the responsibility of each person to do their due research before making an investment decision.
Matías Alberti is Country Manager of Buenbit in Argentina. He was previously manager of Buenbit Pro. Before that, he served as CEO of Shibiliy and CFO of Hormiga Ventures, among other things.
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