How Institutions Committed to Bitcoin During a Bear Market

If you listen to ARK Invest, expect for Bitcoin to become a multi-trillion dollar market before the decade is out.  While this may seem ambitious to some, especially in months past when the overall digital asset sector was in a pronounced bear market, various big-name institutions were un-swayed and took the opportunity to double down on their commitments to Bitcoin over the past year.

Innovators and Service Providers

Before we highlight some of the institutions which have recently committed to Bitcoin, here are a few examples of publicly traded companies playing an increasingly important role within the sector.

Coinbase (COIN)

Over the years, Coinbase has evolved from being a simple exchange to offering a comprehensive suite of products for the digital asset enthusiast.  In addition to this, it is widely regarded as one of the more trustworthy and regulated companies within the sector.  Through offerings like Coinbase Custody, Coinbase Prime, and more, the company holds appeal to both retail and institutional investors alike.

Based out of California, United States, Coinbase was founded in 2012 and employs ~3,500.

Block (SQ)

Block is the mother-company of Square, Cash App, TIDAL, Spiral, and TBD54566875.  Of these five companies, four of them have close ties to Bitcoin, and are actively working to develop solutions for its integration in to society.  Notably, Block is spearheaded by Jack Dorsey – a Bitcoin maximalist known also for founding Twitter.

Based out of California, United States, Block was originally founded in 2009 under the name Square.  Across its various subsidiaries, Block currently employs ~8,500.

International Business Machines Corporation (IBM)

Despite long-ago selling its revered ThinkPad line to Lenovo, IBM has been synonymous with personal computing for decades.  The company has long since expanded in to other areas like AI, and the blockchain ecosystem.  This has resulted in partnerships with companies like METACO, platforms meant to re-envision supply chain management, and more.

Based out of New York, United States, IBM was originally founded in 1911 and is estimated to employ ~345,000 globally.

Sharing the Vision

So what are some of the institutions that share in the optimism of ARK Invest towards Bitcoin?  The investment fund manager provides the following as notable examples.

Source: ARK Invest ‘Big Ideas 2023', Page 64

When looking at the above chart, it is clear to see that institutions began to develop and focus in earnest on digital asset custodial solutions.  While not as flashy at first glance as opening up trading to the public, reliable custodial services are a necessity which will underpin safe investing in the sector for the coming years.  If Bitcoin is to eventually realize its potential and truly become a multi-trillion dollar market, it will be as a result of such foundational pieces paving the way forward.

It should also be noted that the companies listed in the above chart are giants within their industry.  These are not upstarts gambling on future adoption in hopes of gaining an edge on the competition.  These are some of the worlds largest asset managers that have each taken years to evaluate digital assets and their adoption.

Why the Commitment?

There is no single ‘why' explaining the commitment towards Bitcoin by institutions, but rather a basket of reasons.  It could be the fundamentals behind Bitcoin that have continually allowed for it to survive and thrive through many crises over the years.  Or it could be notable past and pending adoption among governments around the world (El Salvador, Hong Kong, etc.).  Or maybe it is simply a hedge against the existing financial system which has failed to bank billions, and has been marred by rampant inflation, criminal activity, and avoidable inefficiencies.

Aside from filling a void in the digital asset sector for services surrounding custody and trading, commitments made during the bear market may also be the product of progress involving past issues like energy consumption.  This was/is a valid concern, and thankfully the BTC mining community has taken this to heart and begun making concerted efforts to utilize sustainable power sources, and promoting the ability for the practice to monetize geographically locked energy, along with waste energy at natural gas sites.

What ever the case may be for this increase in commitment – and there are many justifications, it just further underscores the fact that Bitcoin is here to stay.  There will be hiccups along the road to major adoption for sure, but in recognizing both the resilience and potential of Bitcoin, the aforementioned institutions are well poised to capitalize on its continued growth.

Reaping the Rewards

We are less than two months in to 2023, and those that had the foresight to double down on Bitcoin in 2022 are already reaping the rewards.  Bitcoin is already up 45% on the year, with macroeconomic stressors showing signs of waning, and signs of regulatory clarity within the sector finally being afforded.

With the next halving set to occur in mid-2024, Bitcoin is now approaching the point in past cycles that coincided with a notable shift in sentiment and return of a bull-market.  To support this, just look towards a couple of recent polls put forth by popular analyst ‘PlanB'.  In the first, the question is a simple one – what effect will the upcoming halving have on the price of BTC.

Source: Twitter @100trillionUSD

While the results are no doubt skewed, as Bitcoin enthusiasts are more likely to follow such accounts, the sample size of nearly 25,000 allows for a general gauge in sentiment to be garnered.  With this in mind, it is clear that the majority believe a bull-market is pending as the 2024 halving approaches.

In a follow-up poll two days later, PlanB received nearly 32,000 responses to whether the market bottom for BTC was already in.  As the results show, it isn't even close – the majority of traders believe that this has already occurred.

Source: Twitter @100trillionUSD

Whether technical analysis supports it or not, a potential run-up in market value prior to the halving may end up being self-prophesizing.  If enough people believe it will occur, it will.  Based on the above polls, comprised of a cumulative 75,000+ votes, it is looking like this will most likely come to be true.

If this is the case, we will soon look back on 2022 and note the aforementioned institutions as having played the game better than those that continue to resist change.