Out of stock! – With large investment funds and large companies buying Bitcoin (BTC), it was bound to happen eventually. There would now be a supply of BTC that was far too low to cover the gargantuan demand for bitcoins from institutional investors.
All mined bitcoins find immediate takers
Pantera Capital is an investment company focusing exclusively on the cryptomoney and blockchain technology sector.
In an interview with CNBC, Dan Morehead, CEO of Pantera Capital, shared his expertise on the current dramatic rise in the price of Bitcoin (BTC).
According to the CEO, although institutional investors are buying their bitcoins over-the-counter (OTC) so that their large investments do not drive up the price of BTC, they are creating very strong buying pressure on the – very limited – supply of new bitcoins:
“There is a “bitcoin shortage” due to large institutional buyers like Paypal, who buy more than 100% of the newly created [bitcoins]”.
BTC buyer’s fever is no longer just a problem for private individuals.
As Dan Morehead rightly points out, the new all-time high (ATH) achieved by Bitcoin in December 2020 is very different from the one reached in December 2017. Indeed, it is indeed institutional investors that are on the move this time, and no longer individual investors.
We can indeed see these compulsive purchases of Bitcoin from companies such as the investment fund cryptos Grayscale, or the company MicroStrategy, listed on the Nasdaq. Both of these firms have accumulated impressive quantities of BTCs in recent months.
The same is true for Bitcoin futures contracts: these products, which are highly appreciated by institutional investors, have never been so popular as they are today. At the end of December, there would now be a record $8.89 billion of open interest positions in the main BTC futures.
To conclude, even if Dan Morehead acknowledges that Bitcoin and cryptos are still a “very, very young” asset class with a lot of volatility, he explains that the adoption of the king of cryptos is growing.
Indeed, he recalls that only 6 years ago, the Bitcoin network only had around one million users, whereas now more than one hundred million people find a use for this blockchain network.
The conclusion already seems obvious: with the current number of users alone, there is already no longer 1 BTC for everyone, since there will never be more than 21 million Bitcoins. Moreover, unlike individuals who could buy BTCs for short-term speculation, institutional investors buy them for much longer time horizons, of the order of 5 to 10 years at least. This last point is very promising for the future of Bitcoin.