Despite individual reluctance, large institutional investors such as the New York Digital Currency Group (NYDIG) continue to bet on Bitcoin.
NYDIG, one of the companies responsible for funding cryptocurrency miners, recently raised $720 million from 59 investors for a product called Institutional Bitcoin Fund. The company disclosed the information to the Securities and Exchange Commission on September 29, 2022 and said that its Bitcoin balance reached its highest level in the third quarter of 2022.
On October 3, 2022, the company announced the hiring of two new CEOs, Tejas Shah and Nate Conrad, both from Wall Street banking giant Goldman Sachs. According to Bloomberg, both have been hired to lead the crypto mining and payments business.
Ross Stevens said via press release: “When markets crash, character emerges. The strategy of the most risk-aware institutional investors leads them to Bitcoin and earnings to NYDIG, this past 12 months.”
NYDIG fundraising comes as market is in ‘extreme fear’
While the situation may be tough for retail investors, the current bear market has proven to be a good time to be in crypto for institutional players. According to the 2022 report Annual Global Hedge Fund accounting firm PwC found that more than a third of hedge funds are invested in crypto, worth a total of $4.1 billion, up 8% from 2021. Assets such as Abrdn, BlackRock and Charles Schwab have also jumped on the bandwagon , driven in part by discerning clients wanting exposure to another asset class. BlackRock recently announced the creation of a private bitcoin fund for its institutional clients.
On this occasion, Joseph Chalom, CEO of BlackRock, said in August 2022: “Our institutional clients are increasingly interested in exposure to digital assets and are interested in how to effectively manage the operational life cycle of these assets.”
MicroStrategy, already well established in the club of BTC-owning companies, recently acquired 301 Bitcoins, bringing its total reserve to nearly $4 billion.
It seems that many institutional investors have accepted the inherent volatility of cryptocurrencies and are determined to plan for a long-term investment. NYDIG’s fundraising and Microstrategy’s repeated purchases come at a time when the cryptocurrency fear and greed index is firmly entrenched in the “extreme fear” zone, which describes market sentiment very well.
Shopify’s CEO is bullish on Coinbase stock
The cryptocurrency market crash also proved to be a good time for wealthy individuals to invest in the sector. Coinbase board member and Shopify CEO Tobias Lüttke has spent $369,000 per week on Coinbase stock since early August 2022 as Coinbase’s stock price suffered along with the market. Coinbase’s share price is also down more than 75% year-to-date, broadly in line with Bitcoin’s price performance.
Shares of Coinbase rose briefly after it announced its partnership with BlackRock in early August 2022. This partnership will allow BlackRock’s institutional clients to access cryptocurrencies through the exchange.
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