The Galaxy Digital founder pointed out that institutional investors are influencing the supply of available Bitcoins leading to the price rise
Mike Novogratz, the founder and CEO of diversified financial services firm Galaxy Digital, stated that institutional investors have a greater opportunity to buy Bitcoin (BTC) that is currently in circulation and thus are driving the current Bitcoin bull run. Bitcoin has continued its unabated rally in 2021 with its price rising over $5000 in three days and crossing $34000 for the first time in 12 years.
In an interview with BBC World News held earlier today, Novogratz explained that while pandemic-related economic relief measures by governments across the world leading to printing more money and “debasing fiat money” has fuelled the ongoing bull run, it is institutional investors turning towards cryptocurrencies that are making the most significant contributions.
Further, in the last three years, major firms have changed their approach towards digital currencies and are closer to accepting crypto than ever before. This has been affecting the supply of available coins and in-turn is driving up the price, the CEO stated.
“Now we’re seeing places like PayPal—at 340 million customers—servicing Bitcoin and selling Bitcoin [along with] big insurance companies in the United States”, said Novogratz. “As the institutions move in, there just is not a lot of supply […] There are a lot more than 21 million millionaires out there”, he pointed out.
2020 has witnessed many major institutions joining the crypto space for the first time. Business intelligence firm MicroStrategy announced that it had purchased $425 million in BTC. The investment is now worth more than $1.2 billion.
Mobile payments company Square announced that it had invested $50 million in Bitcoin in October. Within a week, asset manager Stone Ridge Holdings announced the purchase of $114 million worth of Bitcoin as a part of its treasury reserve strategy In December, Massachusetts-based insurance firm MassMutual purchased $100 million in BTC for its general investment account.
Investment strategist Raoul Pal, the founder and CEO of Global Macro Investor agreed with Novogratz’s bullish sentiment arguing that it is possible for Bitcoin to be priced “between $400K and $1.2M” by the end of this year if trends were to continue.
Pal had revealed back in November that despite 98% of his liquid net worth being invested in BTC and Ether (ETH), he doesn’t own enough.
Novogratz had earlier stated that crypto owners should have invested up to 3% of their portfolios into Bitcoin and they must hold it for at least five years. However, the CEO recently advocated a change in his opinion by arguing that new investors should put at least 5% of their portfolios into BTC as “Bitcoin’s not going back to zero”.