Ari Paul, the co-founder and chief investment officer of crypto asset investment firm BlockTower Capital, says institutional investors are increasingly buying Bitcoin to protect their wealth.
In a new SALT Talks interview with John Darsie, Paul says that large investors are taking a defensive approach when putting their money in the flagship crypto asset.
“We’ve been talking with a lot of billionaires in the financial world. It’s such an interesting shift in mindset. They are now thinking defensively. They are thinking enough of their billionaire buddies have 10% of their net worth in Bitcoin. If they don’t, they are thinking ‘Man, if Bitcoin does another 20X, I’m not invited to the parties anymore. I’m not in that rich club’, wherever they are in the hierarchy. So now they are thinking, ‘I need a passive allocation. I need 10% of my net worth in this just to keep up, just in case.’ It’s not about getting rich, it’s now about staying rich.”
The BlockTower Capital chief investment officer says the amount data indicating high net worth investors are entering the market is overwhelming.
“We’ve seen tons of Bitcoin moving off exchange[s]. Every data point on this is massive institutional buying. You have some quantitative data. Things like inflows into Grayscale, which are inflows into the closed-end vehicle. That was I believe $3.8 billion in Q4 which was close to everything that have flown into Grayscale prior to that.”
Paul adds that the new category of investors will contribute to a long-term reduction in Bitcoin’s volatility.
“Those are very strong hand buyers. These are people who are looking to buy more on dips. These are people who are not going to sell with a change in trend. The volatility is not going away. You can’t have raging bull runs that take you 10x higher without volatility. The volatility will gradually fall as this institutionalizes [with] broader market participation.”
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