Digital Assets: Sovereign Wealth Funds The Unseen Gorilla In The Bitcoin Room

October 21, 2020 | Digital Assets, News

Bitcoin would be a moonshot if sovereign wealth funds invested only a fraction of their resources in it.

There has been a remarkable change in recent months in the perception of bitcoin as an investible asset. Large, listed companies have parked sizable chunks of their cash reserves in the cryptocurrency. The motive: to diversify out of the dollar and to preserve the purchasing power of the money. Institutions have invested heavily in Grayscale Investments’ various cryptocurrency trusts. The firm has received over $1 billion in inflows during the third quarter of 2020. As this is being written, bitcoin is trading well above the psychological resistance of $12,000. However, sovereign wealth funds have not yet joined the party. (NEWSBTC)

Meanwhile, economic turbulence in countries such as Venezuela and Turkey, and protests in Hong Kong and Nigeria, have pushed people towards bitcoin. According to NewsBTC, there has been a sharp rise in the number of new wallets with sub-1 BTC balances, proving rising retail adoption.

However, there is one major investor class that is marking time on the sidelines and is yet to invest in BTC.

Sovereign wealth funds

According to one on-chain analyst, these wealth funds currently manage about $8.5 trillion and none of it is parked in bitcoin.

And when these entities veer around to bitcoin, the tsunami of inflows could send BTC into a bullish uptrend of monster proportions.

According to the analyst, it is only a matter of time before an optimum portfolio must include BTC, triggering a “serious upside” when these funds jump on the bandwagon.


Indirect holdings – willy nilly

It may, however, be noted that Norway’s $ 1 trillion oil fund, the world’s largest sovereign fund, has an indirect exposure to bitcoin because of its investment in MicroStrategy (NASDAQ: MSTR).

The company has invested $425 million of its cash reserves into bitcoin and as a result, the Norwegian fund has exposure to $6 million worth of the cryptocurrency because of its 1.51% shareholding in Microstrategy.

Related Story:    MicroStrategy’s Labor of Love On Bitcoin

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