Bitcoin’s growing influence as an inflation hedge and a treasury asset courtesy institutional FOMO this season has driven the price of the top cryptocurrency to the moon. As of today, more than 10 publically traded companies have purchased Bitcoin.
MicroStrategy, one of the leading software giants started converting a portion of their treasury cash into bitcoin from August this year and hasn’t stopped since then. They have purchased over $1.3 billion in Bitcoin to date out of which they purchased $650 million worth of BTC yesterday during the flash crash. On top of that, they also sold $650 million worth of debt purchases in the form of convertible notes to purchase more bitcoin.
PayPal, Square Inc, Grayscale, and MicroStrategy together are currently buying more bitcoin than being mined daily. The most recent $650 million purchase was worth more than 20 days of mined bitcoin. The aversive buying by these institutions is creating a Bitcoin shortage in the market according to Pantera Capital CEO Dan Morehead.
There’s a “bitcoin shortage” due to big institutional buyers like Paypal purchasing more than 100% of newly-created currency, cryptocurrency expert Dan Morehead says. https://t.co/qtI233fzM0 pic.twitter.com/H8mPoScAAh
— CNBC (@CNBC) December 22, 2020
Institutional Buying Spree Keeping Bitcoin Price Afloat?
Bitcoin is on a bullish spree ever since breaking past the key resistance of $20,000 last week, registering a new all-time high of $24,279. The bullish momentum was so strong that it liquidated many short positions throughout last week as it maintained its position above $23,000 despite market correction woes. The bulls finally exhausted on Monday seeing a flash crash of near $1,800 taking bitcoin price from above $24,000 to $21,900. However, the top cryptocurrency recovered a significant portion of its losses by the end of the day and closed above $23,000.
Many believe the recovery was possible because of extensive institutional buying boosted by another $650 million bitcoin purchase.
Bitcoin closed on a record weekly high of over $4,000 and currently nearing $23,500 with over 4% gain in the past 24 hours. Looking at the current buying spree of institutions and especially MicroStrategy whose CEO Michael Saylor currently seems to be one of the biggest bitcoin proponents, the top cryptocurrency is expected to touch $30,000 by the end of the year.