Will institutions hold Bitcoin for years, as was first thought? Or will they sell for quick cash?
More and more mainstream giants have invested money in Bitcoin in recent months. Some speculate that these companies plan to hold their bitcoin investments for years. Bitpay’s commercial director is not so sure. He believes these companies could sell their holdings sooner than originally planned if the price continues to rise.
“A lot of the institutional buyers have bought in at $20,000, so that would be my floor for how far Bitcoin could go down,” Sonny Singh said in an interview with Bloomberg on Monday, after Bitcoin declined slightly.
“All these buyers who bought in thought, ‘Oh, we’re in Bitcoin for three to five years now.’ While that’s great, I think when Bitcoin hits US$45,000 in the next month or so, they’re going to say, ‘Wow, we just made double that.’ We don’t need to wait for those three years, let’s sell some of it now.'”
Major players’ interest in Bitcoin intensified in the second half of 2020, when companies such as MicroStrategy, Square and MassMutual invested significant sums of money in Bitcoin.
“I was talking to someone who works at Skybridge,” said podcaster Peter McCormack in a recent interview. “He said that at MassMutual, you have to understand that while the company has put $100 million into it, that’s not a lot of money for them,” McCormack said. “They don’t want to sell next year, or in two years, or in five years.”
Singh, however, made an argument to the contrary. Institutional sales could spur a new wave of BTC sales. “Then you start to see a selling pressure of $200 million in sell orders that the industry has never seen before,” Singh said. “That could cause a catapult-like event that could send the price down pretty quickly. And it could go from 45,000 to 40,000 to 35,000 down to 30,000 or similar levels, but I think the floor would be at US$20,000.”
Singh spoke of a current lack of BTC selling pressure and said he saw little resistance to a BTC rise to US$40,000 or US$45,000 “in the next month or so”.