Capital Inflow Into Bitcoin Focused Funds Grew 1,542% In Just A Ye…

Capital Inflow Into Bitcoin Focused Funds Grew 1,542% in Just An Year — Image by Eivind Pedersen from Pixabay

Yerevan (CoinChapter.com) — Funds focused exclusively on Bitcoin attracted a growing number of investors. Compared to the $3.5 bn overall capital inflow a year ago, the investments in these funds grew by a whopping 1,542%, now standing at $54bn, according to James Butterfill, an investment analyst at CoinShares, a London-based digital investment company.

During the past year, Bitcoin enjoyed support from institutional investors and commercial companies alike. The first bitcoin bulls include MicroStrategy, the digital services company, electric car manufacturer Tesla, and most recently Nexon LTD. The Korean-Japanese computer game giant joined in to ride the bull on April 28.

With a growing market cap of $1 trillion, Bitcoin has become too large for banks to ignore. Many investment banks started incorporating Bitcoin into their portfolios. Morgan Stanley was the first major U.S. bank to offer Bitcoin funds to their wealthy client sector. Also joining the bitcoin bandwagon was its renowned skeptics, like Jamie Dimon, the Chief Executive of JPMorgan. The banking giant now offers bitcoin as an investment option for their most well-heeled clients.

Greg Waisman, the co-founder, and COO of the global payment network Mercuryo, shared his opinion on the matter in an exclusive interview with CoinChapter.com:

[…]Giant companies are continuing to accept BTC, such as Tesla, and even JPMorgan.
Even though intimidated governments are banning BTC, the demand and interest continues to surge and push the coin’s price and adoption – resistance level $56,000
he said

Why Bitcoin?

Despite being gradually adopted by mainstream economics, cryptocurrencies remain a risky investment. Experts suggest investors shouldn’t put more money into crypto than they can afford to lose. Moreover, they should be prepared to lose 100 percent of their investment. But this begs the question if crypto is risky, why do Bitcoin fund investments continue to grow?

The answer lies in the global financial climate and the current state of the U.S. dollar. According to Eva Szalay, a contributor for Financial Times:

Since central banks around the world responded to the coronavirus pandemic with easy money policies, large asset managers and hedge funds have been looking for ways to protect themselves from a return of inflation and the erosion in value of some currencies, including the dollar.
said Eva Szalay for ft.com

And while USD faces “erosion in value,” Bitcoin constitutes an investment alternative that acts as digital gold and provides protection from USD inflation.

Michael Saylor, the CEO of MicroStrategy, sees the “easy money” policy as a threat. He was open about his “profound unease” with central banks propping up economies with “cheap money” while speaking to Time. Saylor admitted that his lack of trust in the mainstream economy and how central banks run it brought him to bitcoin. The excessive quantitative easing by the Federal Reserve devalued the US dollar by up to 13.5 percent from its mid-March high.

What’s next for the cryptocurrency?

Many experts still believe that the crypto market is a bubble ready to burst at any second. But growing involvement from institutional and commercial investors suggests that the volatility of Bitcoin is gradually stabilizing.

During the London session on Friday, Bitcoin was trading at $54,742.

BTC trading at $54,750. Source: TradingView.com — BTC trading at $54,742. Source: TradingView.com

What comes next for the flagship cryptocurrency? As Mr. Waisman added:

In days to come, BTC is likely to see another drop when the Turkish ban actually arrives. However, after that, the coin should start recovering properly from the level of $48,000.
Greg Waisman for CoinChapter.com

He also added a price prediction for the upcoming weeks, stating:

If the rising interest in cryptos attracts more institutional investors, BTC price could skyrocket to $75,000 this year […]. The beginning of the month often leads to price surges, so it would not be surprising for BTC to attempt to return to its ATH in early May.
the COO stated.

If the co-founder of Mercuryo is right in his predictions, Bitcoin will see a 37 percent rise from the current value in the upcoming weeks. Meanwhile, the growth of investments in Bitcoin funds by 1,542 percent in the past year provides hope for the crypto supporters.