MicroStrategy’s purchase of Bitcoin shows that institutional investors are looking to reduce risk

The adoption of Bitcoin (BTC) by mainstream gamers is back on the agenda after MicroStrategy’s recent $250 million purchase of BTC. Industry commentators have also stated that corporations connecting to Bitcoin will provide a considerable boost to push the valuation of BTC to new heights.

With the coronavirus pandemic negatively impacting economies around the world, investors appear to be looking for safe haven assets. In fact, the focus on both BTC and gold is causing a significant coupling of their respective price actions, as central banks continue to pursue aggressive quantitative expansion. With a firm like MicroStrategy covering itself with Bitcoin, it looks like this pivot could now extend to Wall Street.

Reports from the Trump administration seeking to delay the collection of Social Security payroll taxes are also sounding the alarm in the United States. The likely result of this executive order is that more money will be printed to finance the country’s social security, which consequently means further depreciation of the U.S. dollar.

Well-established retail adoption

Since the beginning of 2020, the number of addresses with 0.01 BTC and 0.1 BTC has been steadily increasing, while data from the market intelligence platform Glassnode states that the number of „wholecoiners“ – portfolios with at least 1 BTC – has also increased in 2020, all of which indicates a constant culture of „sats stacking“ by various groups of investors.

When the U.S. government sent the stimulus payments to the public in April, Coinbase reported an increase in BTC purchase amounts in the order of $1,200 – the exact amount in the checks. The Crypto Wealth purchased with $1,200 at that time is now worth more than $1,600, resulting in gains made by BTC on a weakening of the USD during this period. Even when Bitcoin dropped to $3,800 during the „Black Thursday“ market crash, exchanges reported an increase in retail BTC purchases.

Platforms like Square’s CashApp are even taking advantage of the sats stacking culture, with features aimed at automating periodic micro-buying of BTC. Studies show that „dollar-cost averaging“ – the practice of dividing total investment in fixed intervals – ensures a positive return for Bitcoin investors, regardless of volatile price action. Therefore, the events of 2020 so far suggest that Bitcoin is considered a viable asset as a safe haven.

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