Sovereign Wealth Funds Enter Bitcoin – Will Other Countries Follow Suit?
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Sovereign Wealth Funds Enter Bitcoin – Will Other Countries Follow Suit?

March 30, 2021      Ashna Goel

The Crypto world has become the focus of mainstream media this year, gaining massive exposure and interest from traders and investors around the globe. While the unmatched support received by cryptocurrencies and DeFi-led projects is a long-awaited vision of every early adopter, institutional giants share heavy credits in this victorious bull. 

The current scenario of the market is undoubtedly at the hands of influential figures like tech genius Elon Musk as well as the heavy participation by institutions. Investors basically hoarding on BTC with every dip and going public with their positive take turned BTC to stretch its market cap to over 1 Trillion. 

Where the fear and speculations from the 2017 BTC crash are well reflected on the hesitation of retail investors, institutions on the other hand are going all in. This, however, raises several questions including, what in the DeFi market and the world of cryptocurrencies will keep the interest flowing while the administrations of various countries work toward an official statement on cryptocurrencies.  

Sovereign Wealth Funds Enters BTC Market

It doesn’t come as a surprise that the community may have to be a bit patient till they see central banks looking at bitcoin and other cryptocurrencies in their treasuries. But the statement of New York Digital Investment Group (NYDIG) CEO, Robert Gutmann has pushed BTC into a brighter light and open to a monumental heap of money. 

Appearing on a podcast hosted by Real Vision’s Raoul Pal, Guttman has revealed the NYDIG’s plans to potentially invest in Bitcoin. He also revealed that the firm is already in discussion with sovereign wealth funds about the possible investment in Bitcoin. While confirming Gutmann’s statement Raoul Pal added that Singapore’s sovereign wealth fund with assets worth $306 billion has already bought bitcoin. Moreover, he mentioned that they have been purchasing “virgin Bitcoin” straight from the miners for quite some time now. 

It is an inevitable truth that with sovereign funds taking into BTC, a huge wave of money is expected to flow into the market, making the current BTC predictions a pathetic excuse for numbers. On that note, Raoul Pal, who is famously known for his everlasting bullish stance for bitcoin prediction BTC to hit the $1 million mark in a matter of five to six years. However, it is a hovering question, whether other countries are going to follow behind in this new and massive cause of adoption. 

Will Other Countries Follow?

The vision of seeing cryptocurrencies in the balance sheets of central banks and CBDC’s coming in might still be a far reach. However, money coming from sovereign wealth funds into the market is a monumental step in a rather long journey. Imitating the pattern of when money from institutions came into the BTC, bitcoin will surge even on a larger scale when more sovereign funds join the trend. Why? Let’s see.

Sovereign funds represent assets that are state-owned reflecting directly on the country-wide adoption that would come in hand with the investment. Moreover, it would be foolish to ignore the size of the wealth funds that can potentially incline towards Bitcoin including countries with some of the largest sovereign wealth funds like China with over $2 trillion worth of assets and the United Arab Emirates holding more than $1 trillion in their sovereign funds. Norway, Saudi Arabia, and the already invested Singapore are countries with some of the largest sovereign wealth funds with assets close to a trillion-dollar. It’s the mounting amount of money held in these funds that can potentially send the crypto market into an unprecedented overdrive.

However, given the current situation, nothing can be said for certain. With an accountable silver lining of regulators of the U.S., for instance, have said or hinted nothing for a ban on cryptocurrencies, to say the least, countries like India are also finally coming around the benefits of cryptocurrencies. India has probably aced the game for sending mini heart attacks to crypto enthusiasts in India, with endless rumors of a potential ban often flooding in the media. However, as early as March, the Finance Minister of India, Nirmala Sitharaman took a rather calibrated yet positive stance on the magnificent concept of cryptocurrencies and blockchain technology, sending a sigh of relief through the traders.

While India may not be a major contributor when it comes to the sovereign wealth funds coming into Bitcoin, Sitharaman’s statement certainly predicts active participation in the crypto market coming from India. The U.S., on the other hand, that doesn’t lack when it comes to sovereign wealth funds is still a mystery with a potential of multiple outcomes. Where crypto adoption and adopters are swarming in the world’s largest economy including publicly expressed support from multiple leading banking and investment institutions. However, regulations regarding the same are not yet officially declared by the regulators. 

Conclusion

While institutions like Microstrategy have left no doubts in their growing trust when it comes to Bitcoin and cryptocurrencies, their CEO Michael Saylor has left no doubts in his intentions of accumulating more BTC with time. Imitating the same faith in the monetary asset, the world’s renowned tech genius and founder of Tesla, Elon Musk, has displayed a rather deep interest with quite a hefty investment and his recent announcement of accepting Bitcoin as payment to Tesla models.

Both figures have also come to reflect strong opinions on the future of Bitcoin due to the decreasing value of the US Dollar and its potential crash. Along with them, skepticism over the dropping value and trust in fiat has led numerous financial analysts and investors to lean towards Bitcoin as their safety net for the future. While the community does wonder if the government will follow in the steps of MicroStrategy, Tesla, and several others, it is still uncertain as to what the U.S. regulators decide with the increasing success of Bitcoin. However, if other countries do follow the example of Singapore, assets flowing from sovereign wealth funds will have the potential to take the crypto market up to an uncontainable surge.

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Ashna Goel
Ashna Goel

Ashna is a graduate from Amity University specializing in Journalism and Mass communications. She is currently working as a content writer for Agio support solutions Pvt. Ltd. She aims to provide quality content and strategy in the field of cryptocurrency and work with digital marketing platforms to deliver brand-specific strategies.