According to recent data, we can expect more institutional adoption of bitcoin post-halving. The year leading up to bitcoin’s third halving event saw more institutional involvement in the world’s most popular cryptocurrency than ever before, and now it seems the trend has picked up momentum in a big way.
In a world rife with inflation fears and stalled economic systems, bitcoin has emerged as a strong contender to many other asset classes, including gold. Rewards for mining a block on the bitcoin network are now just over 6 bitcoins, down from 12.5. The deflationary measure is built into the blockchain system and is currently proving to be an attractive feature for institutional investors.
In the days leading up the bitcoin halving event to today, many firms offering BTC options have reported significant surges in options volume. On May 11th, CME option volume went from $11 million to more than $40 million just three days later, with more than $900 million in contract exchanges taking place over the same duration. Those numbers, for bitcoin, are significant and unprecedented.
In the run up to the bitcoin halving event, CME wasn’t the only firm getting ready for the bitcoin derivative storm. 3iQ Corp released a bitcoin fund on the Toronto Stock Exchange worth over $45 million. Another well-respected company in the cryptocurrency space, Grayscale, has seen record-breaking growth for its bitcoin futures offering in excess of $500 million. Grayscale now controls nearly 2% of all circulating bitcoin. Other companies dealing in digital assets, including Fidelity Digital Assets, and many others, have also reported increased interest and volume.
To put the increased institutional support into perspective, a look at some of the world’s most influential hedge fund managers and how they have now come into the cryptocurrency fold. One such example is Paul Tudor Jones who has given bitcoin a similar status to gold in its ability to protect investors from faltering economies. Paul Tudor Jones is a highly respected hedge fund manager for traditional markets and his endorsement may very well break the ice for many more like him to follow. Jones reportedly has up to 2% of his portfolio devoted to bitcoin.
This type of investor support also opens doors for advancements in how accessible bitcoin is to traditional and institutional investors. For example, when bitcoin futures and funds show up on stock exchanges, they come with a familiar brand of regulation that many investors find comfort in. That regulation allows investors to put their money into bitcoin much like they would any other asset class, without actually having to learn how cryptocurrencies work and how to access them. In short, these types of products promise to swing the doors to the cryptocurrency world wide open, and in a way that’s never been done before.
No one knows what the price action will look like for bitcoin over the coming weeks, months, and even years. However, when the world’s smart money is in, stability and growth are not far behind. Things to look out for now that would indicate even more institutional interest would be a growing number of bitcoin-related products on stock exchanges and a greater number of bitcoin derivatives being offered around the world.