Institutional Demand For Bitcoin Remains High As Inflation Concerns Increase

Bitcoin is up 760% in the last year, with March marking six consecutive months of price increases. This is the longest period of consecutive month-over-month price increases since 2013. Large scale adoption from technology companies and financial institutions continues to increase demand for Bitcoin globally. Inflationary concerns for many fiat currencies is increasing the demand for an uncorrelated inflationary hedge.

Biden Advocates For Another Spending Plan Despite Economic Recovery

Michael Mosier will become acting director of FinCEN on April 11th. Mosier was previously an executive at blockchain analysis company Chainalysis. The agency expects Mosier to improve FinCEN’s ability to regulate cryptocurrency transactions. Economic recovery has continued, with the United States adding 916,000 jobs in March. This brings the unemployment rate down to 6.0%, the lowest levels since the start of the COVID-19 pandemic. The Biden administration is advocating for a new spending package, which would likely be worth about $3 trillion. The bill is primarily aimed at improving infrastructure and creating jobs. This bill may be able to pass due to support from Democrats, who currently hold a majority in the House.

JPMorgan Expects Bitcoin’s Rally To Continue As It Crowds Out Gold

Bitcoin was up more than 21% in the month of March. The recent price action marks six consecutive months in which Bitcoin has appreciated in value relative to the dollar. JPMorgan issued a statement setting a price target of $130,000 per Bitcoin. The bank cited decreasing volatility of Bitcoin as a primary driver for the price appreciation, with greater stability boosting its use case as an uncorrelated portfolio diversifier. JPMorgan sees Bitcoin “crowding out gold” as it becomes increasingly stable.

Major Bank Find New Ways Of Gaining Bitcoin Exposure

BlackRock held $6.5 million CME bitcoin futures, which expired on March 26th. The futures were held through BlackRock’s Global Allocation Fund, and secured the firm a net gain of 5.5%. Goldman Sachs has made plans to offer Bitcoin exposure to its ultra high net worth clients. The bank hopes to offer some combination of "physical bitcoin, derivatives or traditional investment vehicles" sometime in Q2. This represents a significant reversal of Goldman Sachs’ sentiment since May of 2020, when they stated that cryptocurrencies “are not an asset class.” Morgan Stanley’s SEC filing on March 31 updated the guidelines of twelve institutional portfolios, allowing all of them to gain Bitcoin exposure moving forward. PayPal has launched its crypto checkout service, which will allow consumers to pay merchants in several cryptocurrencies. KiwiSaver Growth Strategy Fund, a New Zealand based retirement savings vehicle, has allocated 5% of its AUM to Bitcoin.

Blockchain Technology Becomes Increasingly Relevant to Public Markets

Coinbase will go public through a direct listing on the Nasdaq on April 14th. However, the company recently faced scrutiny for inaccurate trade reporting and suspicious trading activity by an employee. Tesla continues increasing its involvement in the Bitcoin network. The company gave payment processor BTCPay feedback on security protocols, which led to a software update from the organization. The rapidly growing NFT market is shedding light on other potential use cases of blockchain technology.

The government has indicated plans for extensive spending and loose monetary policy, despite evidence that the economy is already recovering. Major financial institutions continue finding ways to serve Bitcoin markets, largely due to the appeals of an inflationary hedge. This continued institutional demand has sustained Bitcoin’s recent bull run.