Long reluctant to invest in an asset that is too volatile and difficult to value, investors are beginning to revise their judgment on institutional cryptos. Instrument of diversification or safe haven, bitcoin gained credibility during the Covid-19 crisis.

“In 2017 the demand for bitcoins came mainly from individuals. This is no longer the case this year with the institutionalization of investors,” notes Chainalysis . The development of over-the-counter markets, where participants deal with significant amounts confidentially, is another sign of the development of the ecosystem. Institutions see bitcoin in particular as a protective asset against uncertainties and risks (inflation, pandemic, etc.) which competes with gold.

Long-term investment

Bitcoin attracts more long-term investors such as American universities, foundations, private banks, wealth management advisors, family offices, companies. But sovereign wealth funds, state investment funds and central banks have not yet taken the plunge. Some, however, are showing interest in this sector and blockchain technology. The Singaporean fund Temasek has thus joined Facebook 's Libra project. Participants who buy bitcoins with a long-term perspective hold 77% of the 14.8 million bitcoins already issued (and which have not been lost by their holders). There are only 3.4 million bitcoins left for those who want to buy some. Not enough to meet growing global demand this year.

Metamorphosis

The players who each hold more than 1,000 bitcoins (nearly $19 million), nicknamed the “whales” of the market, now number more than 2,000, according to Glassnode. This is a new high since 2017. They hold onto their bitcoins and only give them back sparingly in upside moves. The larger an investor is, the more likely they are to sell at a high price, according to Santiment.

Small investors holding less than 1 bitcoin have started selling since the spring, starting at $13,500. Those holding between 1 and 10 bitcoins did so from a price level of $15,200, and wallets with 100 to 1,000 bitcoins started taking profits around $18,000. The “whales” sold little or not at all and even continued to buy globally. The institutionalization of the market brings more stability to highly volatile assets. It promotes its metamorphosis, which began in 2017, and which opens up new prospects for the evolution of bitcoin.