Who's Buying Bitcoin? Institutional Investment Firm Roundup

Bitcoin has become an increasingly popular investment for institutional investors, with many large corporations and investment firms buying billions of dollars' worth of the cryptocurrency. The taboo around publicly traded corporations buying Bitcoin has been broken, with the cloud software company MicroStrategy leading the way by purchasing $425 million worth of Bitcoin in 2020. Other institutional investors followed suit, including payments processor Block and electric vehicle manufacturer Tesla. As of May 2024, MicroStrategy holds 214,400 BTC in reserve, equivalent to more than 1% of the total number of Bitcoin that will ever be issued.

Other notable institutional investors in Bitcoin include Marathon Digital Holdings, Hut 8 Mining Corp, Riot Platforms, Coinbase Global, and Galaxy Digital Holdings. The approval of spot Bitcoin ETFs in January 2024 further fuelled institutional interest in the cryptocurrency.

Financial institutions, such as banks, are also grabbing a piece of the booming cryptocurrency market, with 13 of the world's largest banks investing approximately $3 billion in cryptocurrency and blockchain companies as of August 2021. London-based Standard Chartered tops the list with $380 million in investments, while Barclays is the most active investor based on the number of investments in blockchain companies.

The institutional adoption of Bitcoin is being driven by its potential as a hedge against traditional investments and as a safe haven in the face of global economic uncertainties.

The US government holds over 210,000 bitcoins

The US government has become one of the world's largest holders of Bitcoin, with a stash of over 210,000 bitcoins, worth billions of dollars. This has come about through various seizures and confiscations from criminal activities, including fraud.

In 2022, the US government officially increased its total Bitcoin holdings following the guilty plea from James (Jimmy) Zhong, who defrauded the dark web marketplace Silk Road in 2012. Zhong unlawfully amassed 50,676 bitcoins through the scheme, which were confiscated during a raid on his home.

In November 2020, the US Department of Justice announced the seizure of about 70,000 bitcoins from a person dubbed "Individual X", a hacker who stole them from the Silk Road marketplace.

In addition, the US authorities disclosed that they had confiscated about $3.6 billion in bitcoin from Ilya Lichtenstein and his wife, Heather Morgan, in connection with the Bitfinex hack in 2016. The couple was charged with conspiracy to launder $4.5 billion in stolen cryptocurrency.

The US government's Bitcoin holdings have sparked concerns among some crypto proponents, who worry about the government's influence on the market as a "Bitcoin whale". The government has a history of auctioning off confiscated crypto assets through its Marshall Services, and it is unclear how much Bitcoin it currently holds.

The US is not the only government with a large amount of Bitcoin. The Chinese government reportedly holds about 194,000 bitcoins seized from the PlusToken scam in 2019, while Bulgarian authorities may own up to 200,000 bitcoins, according to reports.

Coinbase is a popular bitcoin investment platform

Coinbase offers a vast array of cryptocurrencies to choose from, with over 10,000 assets available for buying or selling, including top choices like Bitcoin, Ethereum, Dogecoin, and Ripple. The platform also features a native NFT marketplace, allowing users to create, trade, or collect digital collectibles.

Coinbase provides a custodial wallet option for beginners, where the exchange holds the private keys and stores funds on behalf of users. For more advanced crypto users, Coinbase offers a non-custodial wallet, where users have complete control over their funds and hold their own private keys.

Coinbase also offers advanced trading options and robust security measures, including cold storage and multiparty computation (MPC) to protect customer assets. The platform has a tier-based fee structure, with maker fees ranging from 0.00% to 0.40% and taker fees from 0.05% to 0.60%.

While Coinbase is a popular and accessible platform for investing in Bitcoin, it has faced some criticism for high transaction fees and poor customer service. Additionally, the U.S. Securities and Exchange Commission (SEC) has charged Coinbase with operating as an unregistered securities exchange. Despite these drawbacks, Coinbase remains a widely used platform for those looking to invest in Bitcoin and other cryptocurrencies.

BlackRock iShares is an SEC-approved bitcoin ETF

Bitcoin has seen a surge in institutional investment in recent years. The cloud software company MicroStrategy kickstarted this trend in 2020 with its $425 million investment in Bitcoin, followed by the likes of Block and Tesla.

While institutional investment in Bitcoin has been growing, the cryptocurrency has also been seeking approval from the SEC for its exchange-traded funds (ETFs). BlackRock, the world's largest asset management firm, runs iShares, the largest U.S. family of ETFs, with nearly $4 trillion in assets under management. BlackRock filed for SEC approval of a spot Bitcoin ETF in June 2024, which was approved. This was significant as the SEC had previously rejected all applications for a Bitcoin ETF designed to track the cryptocurrency's current market price.

BlackRock's proposal included a "surveillance-sharing agreement" to control fraud and manipulation by tracking trading, clearing activity, and customer identity. This agreement was proposed to address the SEC's key concern about spot Bitcoin ETFs: the potential for market manipulation. While the initial proposal lacked specifics, according to an unidentified SEC representative, it still served as a catalyst for other financial firms to resubmit their applications for similar products.

The approval of BlackRock iShares' Bitcoin ETF is a significant development in the cryptocurrency space. It opens up new investment opportunities for U.S. investors and could potentially end the "crypto winter," as industry experts have predicted. With BlackRock iShares' SEC-approved Bitcoin ETF, investors now have access to straightforward, easy-to-trade funds that directly track the current price of Bitcoin. This approval marks a new phase for the industry, allowing for greater participation and innovation in the Bitcoin market.

MicroStrategy is a vocal bitcoin proponent

MicroStrategy, a business analytics platform, has been a vocal supporter of Bitcoin since 2020. The company's co-founder and Executive Chairman, Michael Saylor, is a strong advocate for the cryptocurrency and has been instrumental in driving MicroStrategy's Bitcoin acquisition strategy.

MicroStrategy first ventured into Bitcoin in August 2020, marking a shift in its traditional treasury strategy. Since then, the company has consistently added to its Bitcoin reserves, making headlines with each significant purchase. As of June 2024, MicroStrategy held approximately 226,331 Bitcoins, valued at around $15 billion, making it the largest corporate holder of the digital asset.

Saylor has been a vocal proponent of Bitcoin, frequently advocating for its adoption as a treasury reserve asset. He views Bitcoin as a hedge against inflation, similar to gold, due to its limited supply of 21 million Bitcoins. Additionally, he considers Bitcoin a superior store of value compared to cash because of its decentralized nature and immutability, making it more secure for long-term wealth storage.

MicroStrategy's approach to acquiring Bitcoin involves a combination of debt financing and opportunistic buying. They have raised capital through convertible note offerings, allowing investors to convert their debt into MicroStrategy stock at a predetermined price. This strategy enables the company to raise significant funds without diluting existing shareholder ownership. Moreover, MicroStrategy has been known to capitalize on market dips, taking advantage of price discounts.

The company's success is closely tied to the long-term performance of Bitcoin's price. If Bitcoin's value increases significantly, MicroStrategy's substantial holdings could lead to a massive surge in its valuation, positioning them as a trendsetter for other companies to follow. This could trigger a domino effect, accelerating mainstream corporate adoption of Bitcoin as a reserve asset and transforming the financial landscape.

Michael Saylor's unwavering belief in Bitcoin's potential has been a driving force behind MicroStrategy's aggressive acquisition strategy. His advocacy for Bitcoin and its potential to revolutionize financial services and traditional financial institutions has positioned MicroStrategy as a significant player in the crypto market.

Binance holds the most bitcoin after Satoshi Nakamoto

Binance is one of the world's largest cryptocurrency exchanges, and it holds the most bitcoin of any institutional investment firm, second only to the mysterious Satoshi Nakamoto, the anonymous creator of Bitcoin.

The Rise of Institutional Investment in Bitcoin

Bitcoin has long been an investment interest for individuals, but following the approval of spot bitcoin ETFs in January 2024, businesses have become the biggest bitcoin investors. The floodgates opened when cloud software company MicroStrategy bought $425 million worth of Bitcoin in August and September 2020. This move was followed by payments processor Block and electric vehicle manufacturer Tesla, signalling a shift in the perception of Bitcoin as a legitimate investment asset.

The Appeal of Bitcoin

For institutional investors, bitcoin and other cryptocurrencies offer a hedge against more traditional investments and a safe haven in the face of central banks' money-printing. Bitcoin is also seen as a store of value and a way to preserve and grow wealth, with some investors predicting that its price will continue to increase over time.

Binance's Bitcoin Holdings

While the exact amount of bitcoin held by Binance is not publicly disclosed, it is believed to be one of the largest holders of bitcoin, second only to Satoshi Nakamoto. Binance offers a wide range of services and products that allow its users to grow their crypto holdings, including staking, yield farming, and crypto lending. Binance also provides its users with educational resources and tools to help them make informed investment decisions and manage their risk.

The Future of Bitcoin and Institutional Investment

As the cryptocurrency market continues to evolve and mature, it is likely that more institutional investors will enter the space and recognise the potential of bitcoin and other digital assets. However, it is important to remember that the crypto market is highly volatile and that investing in bitcoin carries risks.

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