The move by the biggest electric automaker in the world Tesla Inc. to purchase $1.5 billion worth of Bitcoin (BTC) has revamped the positive sentiment around Bitcoin from institutional investors. The move is unprecedented and has earned a lot of commendations from the Bitcoin proponents, many of whom expect more corporate investors to do the same.
Bitcoin can be described as a new product with no known company backing its production, marketing, and sales, but rather achieves this goal with those who have purchased it. Many have accused the Bitcoin ecosystem to be a Ponzi scheme, wherein, those who already own the coin do all they can to promote it for new people to wade in.
Investors Moving Slow But Continue to Adopt Bitcoin
The idea is simple, the more people buy the coin, the more value it garners based on shrunken supply and general scarcity. Marketing or promotional attempts are encouraged for any new product, but forcing it down on people’s throats may be anti-revolutionary, based on what Bitcoin itself stands for.
The promotional attempts of Bitcoin advocates today are taking a subtle turn with comments that suggest, refusal to buy or own Bitcoin is anti-progressive for an organization’s growth. This was reflected in Jim Cramer’s words when interviewed on CNBC’s Squawk Box, noting that it is almost “irresponsible” for organizations not to put a certain portion of their liquidity in Bitcoin.
The tag irresponsible may be overdrawn and tagged as an assault on the more conservative investors. Many of these institutional investors are taking their time to adjust to the realities of the volatilities inherent in the cryptocurrency marketplace, while many are still skeptical about investments in the space, seeing the lack of encompassing regulations in the space.
Switching from the highly regulated stock market to the unregulated Bitcoin market is sure to take some firms a lot of time. This is almost a rule of thumb as most institutional investors are accountable for their shareholders’ funds, which cannot be blown into an untested investment option.
Bitcoin Has Proven to Yield Dividends Over Time
However the growth of Bitcoin over time is being fueled, the asset has proven to maintain a consistent growth rate over time and thus, the possibility of new investors losing their funds over time is highly unlikely.
Bitcoin has a strong technical background which will limit its total supply to 21 million coins. As more of these coins are mined and the institutional investors stock up on the asset, there is bound to be a price surge to balance out or compensate the available coins in circulation.
The mainstream adoption of Bitcoin is bound to make this happen over time, thus giving an unwritten guarantee to investors who make an entry into space at this time.
With Tesla joining the likes of MicroStrategy Inc., Square Inc., and Grayscale Investments, many Bitcoin bulls are looking at globally acclaimed multinationals such as Apple Inc. and Oracle to also buy the premier digital currency. While it is completely not wrong to speculate on the next moves of these big firms, it is out of place to push them to purchase bitcoin beyond when they will be operationally ready.