Institutional adoption of Bitcoin has dominated crypto headlines lately, such as MicroStrategy's $425 million investment and more recently Square's $50 million investment. There are many reasons why institutions are increasing their treasury exposure to Bitcoin in 2020, despite the technology being over 10 years old, and I'd like to break down the top five reasons. First, Bitcoin volatility has massively declined this year. Volatility has always been one of Bitcoin's biggest criticisms, and the #1 reason why institutional investors are afraid to participate, but "defi summer" has helped Bitcoin find a more stable and efficient price around $11,000. Second is inflation—as the economy continues to be propped up by multi-trillion-dollar stimulus packages by Congress and the Fed, companies look to fill their treasury reserves with assets other than the greenback. Recently, Warren Buffett and Berkshire Hathaway sold $2.5 billion stake in Wells Fargo, citing inflation concerns. With a fixed supply of 21 million, and 18.7 million already in circulation, no individual person, government, company, or institution can produce more BTC outside the scope of mining. Third, the equity markets have been overrun by retail investors, as 0% commission-fee models like Robinhood have led to overly-inflated stock prices. Tesla (TSLA) has gained over 500% this year and is starting to feel bubbly. Fourth is FOMO (fear of missing out); market validation by other Wall Street investors, banks and managed funds have peaked interest in Bitcoin the past few months, and the fact that 64% of all bitcoin hasn't moved since 2018 is adding to demand pressure. Fifth, BTC is still about 50% from its all-time high of $19,650 on December 15, 2017, so many investors are looking at Bitcoin as being both a great hedge against inflation as well as having enormous upside potential too.

Cryptoslate (Oct 10)