In an emerging trend that’s catching the eye of financial markets worldwide, heavyweight corporations and wirehouses are on the brink of channeling substantial investments into Bitcoin, according to Bitwise’s latest insights. Matt Hougan, the Chief Investment Officer at Bitwise, highlights a burgeoning interest from entities controlling assets in the trillions, eyeing spot Bitcoin exchange-traded funds (ETFs) as their next investment frontier. With a significant shift expected by the end of June, the landscape of cryptocurrency investment in South Africa and globally is poised for a transformative phase.
Despite cryptocurrencies not being fully regulated in South Africa, which implies that sellers, real estate agents, and attorneys are not mandated to accept cryptocurrencies as payment but may do so at their discretion, the adoption of cryptocurrencies has seen significant improvement. Leading the charge, Absa Bank, followed by African Bank, Al Baraka Bank, and Barclays Africa Group, have facilitated easier methods for purchasing Bitcoin, signaling a notable shift towards embracing digital currencies within the nation’s financial ecosystem.
Bitwise’s March 9 memo to investors underscored the firm’s engagement in “serious due diligence” with major corporations and institutional consultants. These discussions are centered around diversifying investment portfolios to include Bitcoin in the coming months. Hougan pointed out that a diverse group, including retail investors, family offices, hedge funds, and venture capital firms, are gearing up to increase their stake in spot Bitcoin ETFs.
Hougan emphasized the future buyers’ role as much as the current investors’, stating, “Just as important as who is buying today is who will be buying tomorrow.” This statement underlines the growing institutional interest in Bitcoin ETFs, which has been instrumental in driving Bitcoin’s price up by more than 50% since January 11, from $45,603 (R855,276.28) to $68,583 (R1,286,445.68).
Since their inception, Bitcoin ETFs have seen nearly $9 billion (R168.84 billion) in net inflows, with Hougan expecting this trend to intensify, especially from the second half of the year onwards. He remarked on the significant potential for growth, with trillions of dollars in assets set to enter the market. “Based on current trends, I’d suspect we’ll see our first significant flows from these three groups in Q2 2024,” Hougan predicted, indicating a surge in investor confidence in these novel products.
Previously, Hougan has shared his optimistic outlook on Bitcoin ETFs, anticipating a “bigger wave” of institutional capital to further bolster Bitcoin’s value. BitMEX Research supports this enthusiasm, revealing that Bitcoin ETFs have attracted $8.89 billion (R166.72 billion) in net inflows since their launch, with BlackRock’s iShares IBIT fund leading in new inflows. Bloomberg ETF analyst Eric Balchunas called these figures “bananas numbers for ETFs under [two months] old.”
Adding to the milestones, on March 8, BlackRock’s Bitcoin ETF outpaced MicroStrategy in total Bitcoin holdings, boasting 197,943 Bitcoin valued over $13.5 billion (R253.02 billion). This shift underscores the growing acceptance and enthusiasm for Bitcoin investments among major players in South Africa and beyond, signaling a pivotal moment in the integration of cryptocurrencies into mainstream financial portfolios.
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