Finance Trading & Investing

Measuring the Rising Institutional Investment in Bitcoin (BTC) Despite Alleged Bitfinex-Tether Scandal

The past month has seen the cryptocurrency market boost in value as Bitcoin and other altcoins grew by double digits over the course of the month. However, the glory seemed short lived when the news on Bitfinex and Tether broke out as the prices halted the majestic rise seen hours before. The markets have since resumed their bullish momentum which leads us to wonder if the market actually understood the impact of the Bitfinex scandal. Notwithstanding, HASH CIB, a cryptocurrency financial solutions market, revealed last week that institutional investment is also sharply rising in the cryptocurrency market.

No shorts on Bitcoin Futures

The trading market has opened up in the last few years with more exchanges offering different types of financial instruments which are priced using the underlying digital asset value. Some of the recent companies taking up Bitcoin include Fidelity and TDAmeritrade. The two offer Bitcoin storage and trading services across the US. Such markets have boosted the growth of CME Futures investments, the biggest market for US institutions to get exposure to BTC’s price movements.

Weekly institutional investment on CME Bitcoin futures since February (Image: Twitter)

According to the report released on Twitter by HASH CIB, institutional investors took no short positions on Bitcoin deciding on buying more contacts on the digital asset. During the week ending 7th May 2019, the total number of long positions on BTC crossed the 1,400 BTC mark with no shorts placed.

The Bitfinex- Tether $850 million case. What’s that?

While the market has focused on the $850 million deficit scandal by Bitfinex and Tether, the New York AG ruling on the matter and the subsequent raising of $1 billion USD to cover the losses, institutional investors do not seem to care about the news one single bit.

The equities market however had a worse turmoil as US-China trade talks fell through during the week causing a $1 trillion USD wipe off from the stock market. The fall of the equities markets corresponds with the spike in price of Bitcoin, which may explain the spike in BTC’s and altcoin’s market price.

Consequentially, institutional investors seem to have moved their attention from the Tether/ Bitfinex scandal as they pour out funds to obtain cryptocurrencies. Grayscale Bitcoin Investment Trust, the benchmark of institutional investment announced they will be increasing their holdings in cryptocurrencies. This will bond well with other institutional investors and retail investors will soon follow the institutions.

Institutions seem to have turned a blind eye to the Bitfinex alleged scandal and in turn increasing their holdings in Bitcoin. The scandal only affected the price of Bitcoin for a short while at the end of April, a blip that has been obliterated by the skyrocketing prices of the cryptocurrency market in general.



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