Cryptocurrencies have so far become more than just a passing fad. These assets represent the future of global finance and money, and they are on a significant rise that can’t possibly be denied.
Since January, Bitcoin alone has risen by almost 100 percent. The asset has broken its previous all-time record high of $20,000, and it settled above the $50,000 mark just two weeks ago. It has been an impressive year for Bitcoin to say the least, and the numbers suggest that even more growth could be coming from the leading cryptocurrency.
Institutional acceptance is notable
There are several reasons why cryptocurrencies have risen so far. Most prominent is the fact that investors would like to protect themselves from the economic impacts of the coronavirus and hedge their wealth. The pandemic has been perhaps the most significant health and economic crisis we’ve seen in generations, and its footprints are still being felt across markets all through today.
In most crises, assets like government bonds and oil provide the right haven for investors. However, with COVID-19, even these traditional safe-haven assets have faltered. Oil fell to negative territories for the first time last April, and economies fell deeper into the red as governments printed more money in bailouts and relief programs.
This problem left investors with the singular question of what to do. Apparently, the answer to that was simple – buy some crypto.
If there has been any significant explainer for the current crypto rally, it has been institutional adoption. MicroStrategy, a business intelligence firm, has been the fact of the adoption spree, purchasing billions or dollars worth of Bitcoin between last July and the present day. The Virginia-based tech company is now committing a great deal of effort and time to Bitcoin as it looks to benefit from the asset’s rally and resurgence.
Beyond MicroStrategy, however, other top firms have also been doing some interesting work with Bitcoin. Ruffer Investments, a British asset management firm, bought $750 million of it last December. The same can be said for MassMutual – a Boston-based insurance firm that has bought $100 million worth of Bitcoin last November.
Also, because of companies closing their doors, many people become unemployed. So, these people started to search new options to earn online while sitting at home. Fortunately, there are many options to earn money without investments on the crypto market. By using platforms like BountyMarketCap tracker, any human can get cryptocurrencies for performing bounty work in internet. This fact increases the overall cryptocurrency adoption worldwide and pushes bitcoin price higher.
Tech marries crypto
We can continue the list on and on. However, it is also worth noting that another trend is rising in the crypto space – tech companies falling in love with digital assets. We already mentioned MicroStrategy and its move to Bitcoin. However, several other tech firms have made the leap as well.
Why is that?
The same reason as everyone else – to hedge
It goes without saying that the primary reason will be to hedge risk and diversify their portfolios. When MicroStrategy began its Bitcoin purchasing spree, it made it clear that it was looking to move its reserves into the Bitcoin standard and take advantage of the asset’s potential for helping investors hedge their risk.
So far, the strategy has helped. The company benefited significantly from it searly purchases, turning Bitcoin into a vehicle for 5x profits. While the asset hasn’t risen so much since MicroStrategy pumped billions into it this year, there is every indication to believe that the company is playing the long game. So, it is in the running to turn its hedge strategy into a profit behemoth.
Another tech company using Bitcoin to hedge is Tesla Inc. The auto manufacturer bought $1.5 billion in Bitcoin in January, explaining in the press release:
“In January 2021, we updated our investment policy to provide us with more flexibility to further diversify and maximize returns on our cash that is not required to maintain adequate operating liquidity. As part of the policy, which was duly approved by the Audit Committee of our Board of Directors, we may invest a portion of such cash in certain alternative reserve assets including digital assets, gold bullion, gold exchange-traded funds and other assets as specified in the future.”
Tesla essentially diversified its portfolio to include several other assets than cash, and Bitcoin was one of them.
Harnessing Bitcin’s hype and potential
Tech companies are known for their innovation and ability to stay ahead of the curve. Many of these firms have watched as cryptocurrencies became mainstream, and they understand the assets’ ability to transform payments in particular.
To that end, some have started to harness that ability. Last month, job postings on Amazon’s employment portal showed that the company is looking for engineers and other professionals to build infrastructure for a digital payment system in Mexico.
“We are looking for a leader to help us launch a new payment product starting with Mexico as our initial launch country. This product will enable customers to convert their cash into digital currency using which customers can enjoy online services including shopping for goods and/or services like Prime Video,” the job postings read.
Essentially, Amazon understands that digital currencies provide an avenue for bolstering payments. Now, they’re looking to engage the assets going forward.
Beyond the potential, some tech companies are now looking to enjoy the hy[e surrounding cryptocurrencies. Last month, Mastercard announced its plans to support cryptocurrencies in the latter part of this year.
Mastercard is the third major payment company to support cryptocurrencies, following Square and PayPal. The latter two have seen significant gains from their crypto ventures, and Mastercard appears to be looking to benefit from that.
Also, ordinary people who want to buy some BTC at first time, face almost 10% slippage in price and volume limits. For example, due to the Tokpie exchange data, a person who wanted to quickly buy Bitcoin with a bank card had to pay $56,140 per 1 BTC when its price was $51,090 on spot markets. Moreover, the limit was 0.3 BTC for such bank card purchases. All these create an additional hype around bitcoin.
Whatever the reason, the amalgamation of tech and crypto is one that has been heralded for long. Thankfully, it is being born before our very eyes.
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