Firms race to buy Bitcoin as mood shifts from ‘why’ to ‘why not?’

Grayscale CEO Michael Sonnnenshein says institutional demand for bitcoin (BTC) has only increased through 2021, following a record year in which Grayscale’s assets under management reached new highs.

Sonnenshine told CNBC’s Squawk Box on Feb. 10 that last year’s record inflows persisted, which was interpreted as a sign that bitcoin’s current rise could continue.

Contrary to claims by government regulators, Sonnenschein says regulation is not a problem for potential investors. He said many of them are convinced that the ordinances are clear enough.

Sunshine said: The first point of discussion revolves around regulatory issues, and indeed many of these conversations are characterized by the absence of regulatory issues. Many policy makers understand the clarity of the legal framework in this area.

In the same week that Tesla invested $1.5 billion in bitcoin, Sonnenshein says most institutional investors are happy to get into bitcoin over time, rather than putting all their eggs in one basket.

I think the second part of the conversation is about size and timing. So you see companies looking at solutions ranging from 25 basis points to 100 or 200 basis points at a higher level. And they understand that they don’t have to invest everything at once.

By comparison : Tesla recently invested about 770 basis points, or 7.7%, of its gross assets in bitcoin. According to Sonnenshine, MicroStrategy’s investment strategy may be more typical of future buyers. MicroStrategy bought $1 billion worth of bitcoins in 2020.

They’ve seen other companies like MicroStrategy get into this business over time, and they finally believe in its growth. So buying bitcoin, whether it’s here, ten percent higher or ten percent lower, ultimately won’t matter if they believe bitcoin will eventually have the growth they think it will, he said.

According to Sonnenshein, the theme around bitcoin is changing: why? Why not? Because executives from big tech companies like Tesla and Twitter are flooding the crypto currency market. Sonnenshein thinks more visionaries will follow Elon Musk’s example and buy bitcoin. He said:

I wouldn’t be surprised if there’s almost a race now – you have Elon Musk, you have Michael Saylor, Jack Dorsey. You’re going to see a lot more visionary leaders in disruptive companies who really understand that the why hasn’t been put into action yet, and you’re going to see which companies are going to commit to making bitcoin part of their cash flow program.

According to Sonnenschein, the signs are good for 2021, with institutional inflows already up since the beginning of the year.

If capital flows are any indication of investor interest following a record year of 2020, I am very pleased to say that this momentum is not only continuing, but accelerating this year. As a result, we are currently seeing a very steady and growing demand from many institutional players, he concluded.

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