Institutional firms have continued to stack their digital asset reserves despite the current bearish conditions indicating that they are in for the long haul.
Institutional adoption of digital currencies is set to continue growing as more corporate entities buy and hold these assets on their balance sheets. With its over 124,000 BTC, Microstrategy has led several other companies, including Tesla and Grayscale, to own cryptocurrencies.
These institutions have publicly stated that they will continue to stack up more digital assets despite the bearish sentiments currently facing the market. MicroStrategy Chief Financial Officer Phong Le reaffirmed that the firm would continue to purchase Bitcoin despite recent downturns. He further stated that the company had no plans to sell its holdings. Instead, it seeks ways investors can gain value through digital assets.
Grayscale Extends Wings To More Altcoins
Grayscale has announced it is analysing over 25 altcoins with the view of adding them into its digital asset holding. Some of these digital assets currently being reviewed include prominent layer one and metaverse tokens. The company announced this move in a tweet published recently.
The asset management firm intends to create a cryptocurrency specific trust similar to its Grayscale Bitcoin Trust for any altcoin selected. Some of the crypto assets under consideration include; LGO (Algorand), ATOM (Cosmos), AXS (Axie Infinity), DCR (Decred), EGLD (Elrond), ENJ (Enjin), FTM (Fantom), GALA (Gala), SCRT (Secret Network), SAND (Sandbox), STX (Stacks), VET (VeChain), and YGG (Yield Guild).
Several altcoins under consideration saw a surge in valuation following the announcement, reacting positively to the news. Fantom and Cosmos gained 19% and 15.3%, respectively, within 24 hours of the statement. Metaverse tokens including SAND, AXS and YGG also posted impressive gains, with their values jumping by 8.6%, 9.2% and 8.3%, respectively.
Despite its continued interest in digital assets, Grayscale recently saw a decline in its Total Assets Under Management (AUM) value. In an initial report in December, the company recorded a total AUM worth $43.6 billion. However, following the recent market capitulation, it reevaluated its AUM, and its holding is now worth $32.1 billion as of 27th January 2022.
Despite the fall in valuation, Greyscale has continued to invest in digital assets proving that it is here for the long haul.
Long-Term Investors Set To Gain The Most From The Digital Asset Market
Famous Crypto Analyst Anthony Pompoliano believes that the volatile nature of the crypto market suits long term holders to the tee. The complex and uncertain nature of the market makes it almost impossible to predict what happens in the short and long term.
The irrational nature of the market is unsuited to humans who find it challenging to deal with the uncertainty and wild price fluctuations. In 2021 alone, the price of Bitcoin fell by 20% on six different occasions. Furthermore, a 50% drawdown over 95 days marked the fourth time in four years that BTC’s price fell by that margin. This volatility is somewhat incomparable to any other investment asset in existence.
The volatility coupled with the wild swing in investors sentiments makes long term holders the best bet for digital assets. When Bitcoin broke the $38,000 barrier in January 2021, extreme greed was recorded on the Fear and Greed Index. However, in January 2022, Bitcoin’s price fell below $38,000, triggering extreme fear reading on the same Index. Despite the similar prices over a year, this wild swing in outlook further buttresses the assets unsuitability to short-term holders.
Micheal Saylor, CEO of MicroStrategy, believes the best way to invest in the asset class is to buy them while having a long term view. He expressly stated that he regularly buys the tops and bottoms of bitcoin price cycles, ensuring the dollar-cost averaging of his position. With this outlook, investors can easily cut out the noise and focus on the bigger picture with their investments.
Do you see more altcoins being held on the balances of more institutional investors? Let us know your thoughts in the comments below.
Kingsley is a fintech writer with over 4 years of experience covering blockchain and cryptocurrency news. Alo first discovered Bitcoin in 2016 and has been passionate about it ever since, particularly the various ways blockchain can help Africa and the world at large. He desires to give the crypto space a more geographically balanced narrative and serve as a bridge between Africa and the rest of the world. His articles have been featured in Cointelegraph, Beincrypto, and Forkast.news, among others.
