Institutional Investment Plays a Key Role in Bitcoin Surpassing $100,000
The year 2024 is set to go down in history as a record-breaking year for the cryptocurrency market, particularly for Bitcoin. For the first time in its history, Bitcoin has surpassed the $100,000 mark, while BlackRock's (BLK) iShares Bitcoin Trust (IBIT) fund is drawing attention with its rapid growth. As both institutional and individual investors remain interested in Bitcoin, market enthusiasm has surged significantly.
IBIT stands out with its growth rate
BlackRock's iShares Bitcoin Trust (IBIT) has exceeded the $50 billion asset management threshold in a record time of just 228 days. This growth rate is noted to be five times faster compared to the previous record held by BlackRock's iShares Core MSCI EAFE ETF (IEFA) reaching the same milestone.
This rapid growth has significantly contributed to Bitcoin crossing the $100,000 barrier for the first time in history. The world's largest cryptocurrency, Bitcoin, gained over 140% in value in 2024, hitting the $104,000 mark in the early hours of the day. The performance of the spot Bitcoin ETF, IBIT, indicates that demand for Bitcoin as an institutional investment vehicle continues to rise.
Spot Bitcoin ETFs are encouraging institutional investment
Currently, spot Bitcoin ETFs like IBIT play a crucial role in attracting traditional investors to the crypto market. Approved by the U.S. Securities and Exchange Commission (SEC) in January, these funds provide direct exposure to Bitcoin prices without the complexities of trading on crypto exchanges.
The new regulation following the SEC approval has led to billions of dollars pouring in from investors who were previously hesitant towards crypto investments. As of Wednesday's market close, BlackRock's IBIT fund saw an influx of $570.7 million.
MicroStrategy's Bitcoin strategy is boosting earnings
With Bitcoin surpassing the $100,000 threshold, MicroStrategy (MSTR) is realizing significant gains from its Bitcoin strategy. The company is reported to have acquired a total of 402,100 BTC, with a total value exceeding $40 billion. In recent weeks, MicroStrategy has purchased an additional 15,400 BTC, raising $1.5 billion through stock sales for these acquisitions.
This Bitcoin strategy has provided substantial returns for MicroStrategy shareholders, with the company's stock price increasing by 542% this year. MicroStrategy's success is prompting other companies to consider similar strategies.
Positive regulations expected for the crypto sector under Trump's administration
Donald Trump's new administration is drawing attention with promises to support the cryptocurrency sector. Following his proposals to create a Bitcoin reserve in the U.S. and protect American crypto mining operations, it is anticipated that he will adopt a positive stance towards the sector after taking office.
With Gary Gensler, known for his anti-crypto stance, stepping down as head of the SEC and being replaced by Paul Atkins, who advocates for more market-friendly policies, collaboration within the regulatory framework regarding the crypto market may increase.