Bitcoin Dips, but Companies Continue to Buy – What Do They Know?

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In the past month, the Bitcoin (BTC) price has fluctuated significantly, dipping by more than 20% from $67,000 on June 17, 2024, to $53,000 on July 5, 2024.

Despite the dip, however, institutional investors continued to put their money in cryptocurrency. Data compiled by a CryptoQuant user shows that over the past month, institutional investors have added over 100,000 BTC to their portfolios, indicating strong confidence in Bitcoin’s long-term value.

Recent institutional BTC purchases
Recent institutional BTC purchases. Source: CryptoQuant

Why are companies continuing to buy the cryptocurrency, and what can we learn from them?

Key Takeaways

  • Despite a significant dip in Bitcoin’s price, institutional investors have shown strong confidence in its long-term value.
  • Data compiled by CryptoQuant’s user @caueconomy (Cauê Oliveira) showed that in the past month, institutions added 100,000 BTC to their portfolios.
  • High-profile companies like Metaplanet, MicroStrategy, and Semler Scientific have made substantial BTC purchases.
  • The influx of institutional investments has increased market liquidity, which helps prevent sudden price swings and stabilizes the Bitcoin market.
  • Institutional accumulation of Bitcoin during market downturns sends a strong signal to retail investors about the asset’s long-term potential.
  • The heightened interest and substantial purchases by institutional investors indicate a possible trend reversal.

BTC Sees Heightened Interest from Institutional Investors

June was a stressful month for the BTC price, as it has been on a downward spiral affected by a number of economic and political factors.

Bitbank’s crypto market analyst, Yuya Hasegawa, told Techopedia that BTC’s downfall in June could have been threefold:

  • The surprise French election raised concern for financial market stability and shored up the dollar.
  • Selling pressures from the German government increased as they reduced their BTC holdings from 50,000 in May to 30,000 in June.
  • Mt. Gox’s Bitcoin (and Bitcoin cash) repayments to their creditors put the crypto industry on high alert since this meant that Mt. Gox would be releasing around 143,000 BTC into the market.

Hasegawa further added that the market was also seeing an issue with liquidity.

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“As discussed above, the German government has been selling BTC at a seemingly rapid rate, but some of the BTCs sent to various exchanges are actually being sent back due to low liquidity. In other words, it seems that they are having trouble selling thousands of BTCs at desirable prices in a short period of time.”

Despite an overall eerie sentiment within the crypto industry, institutional investors had managed to accumulate over 100,000 BTC within the past month, data compiled by CryptoQuant’s user @caueconomy (Cauê Oliveira) showed.

The user noted that a similar trend in BTC accumulation was observed in March when the BTC exchange-traded fund (ETF) was launched. However, at that time, the funds that issued BTC ETFs accumulated a large portion of BTC themselves.

On the other hand, the user highlighted that the current cycle of heightened institutional accumulation of BTC could “indicate a true process of ‘buying the dip’ in large players.”

Gracy Chen, the CEO of Bitget, added that such recent trends could “indicate a possible trend reversal.”

“The activity of large investors brings increased liquidity to the market and signals the beginning of a new market phase. Understanding these dynamics allows market participants to make informed investment decisions, focusing on long-term growth.”

Which Are the Institutions Purchasing BTC?

While it is challenging to say for sure which institutions are buying large sums of BTC, some of the biggest purchases in the last month made news.

Metaplanet 

Metaplanet is a publicly listed investment and consulting company based in Japan that has been purchasing large sums of BTC for quite some time.

On June 24, 2024, the company announced that its Board of Directors decided to purchase one billion yen (over $6 million, as of July 15) of BTC for long-term holding.

On July 1, 2024, the company purchased 200 million yen worth of BTC (20.195 BTC / $1.2 million) and a week later made a second purchase of 400 million yen worth of BTC (42.466 BTC / $2.5 million).

The company’s latest purchase brings its BTC holdings to surpass 203 BTC.

MicroStrategy 

Michael Saylor’s MicroStrategy, a publicly listed software firm, is another major company that has purchased large sums of BTC in the last couple of weeks.

On June 20, 2024, the company issued a press release indicating that it had purchased 11,931 Bitcoins for the price of around $780 million between April 27, 2024, and June 19, 2024.

According to the press release, as of the time of publication, MicroStrategy owned 226,331 BTC ($8.33 billion).

Bitget’s Chen noted that institutional investors often use the classic buy-and-hold (HODL) approach for long-term investments in cryptocurrencies. She highlighted that MicroStrategy uses this approach for its BTC and Ethereum (ETH) purchases.

Semler Scientific

At the start of June 2024, the publicly traded medical device maker, Semler Scientific, published a report with the US Securities and Exchange Commission (SEC) unveiling plans to purchase $17 million more of BTC.

At the end of May, Semler’s board of directors announced that the company decided to adopt BTC as its primary reserve asset on an ongoing basis, purchasing 581 Bitcoins for about $40 million.

By June 6, 2024, the company held 828 BTC.

Semler Scientific highlighted:

“We view Bitcoin as a reliable store of value and a compelling investment. We believe it has unique characteristics as a scarce and finite asset that can serve as a reasonable inflation hedge and safe haven amid global instability. We also believe that its digital, architectural resilience makes it preferable to gold, which has a market value that greatly exceeds the market value of Bitcoin.”

Institutional Interest Can Affect Market Sentiment

Experts note that an increase in institutional interest in BTC could have a big effect on the overall crypto market sentiment, with a reversal already being observed in BTC’s price.

Within the past week, the BTC price surged by around 10% from $55,000 on July 8 to $62,000 at the time of writing on July 15.

Bitcoin BTC 1-Week Performance
Bitcoin BTC 1-Week Performance. Source: CoinMarketCap

Bitbank’s Hasegawa noted:

“The participation of institutional investors in the crypto market can affect market sentiment. We saw hundreds of millions of dollars flow into Bitcoin ETFs daily during the first quarter of 2024. During that time, trading volumes on spot bitcoin markets saw a noticeable increase, suggesting retail investors were basically bandwagoning institutional buyers.

“However, it can also affect the market in a negative manner. Bitcoin ETF inflow had abruptly stopped for a short period in mid-March. During that time, the market experienced high volatility and the price pulled back hard.”

Bitget’s Chen added that the strategies and actions of institutional investors can also set trends in the market.

“When these institutions start accumulating Bitcoin during a downturn, it sends a strong signal to retail investors that the asset may have long-term value, prompting them to follow suit.”

Chen further added that heightened institutional investments bring substantial liquidity to the Bitcoin market.

“This influx of capital makes it smoother for everyone involved to trade Bitcoin, preventing sudden price swings. This added liquidity not only stabilizes prices but also makes Bitcoin more appealing to a wider group of investors looking for stability in their investments.”

The Bottom Line

Despite the recent volatility in Bitcoin’s price, institutional investors have shown robust confidence in the cryptocurrency’s long-term potential.

Over the past month, these investors have accumulated over 100,000 BTC, suggesting a strategic move to buy the dip.

High-profile companies like Metaplanet, MicroStrategy, and Semler Scientific have made significant BTC purchases, reinforcing the asset’s appeal as a store of value and inflation hedge.

Industry experts are highlighting that such institutional activity not only boosts market liquidity but also signals a potential market phase shift, encouraging retail investors to follow suit. As institutional investments grow, they are likely to stabilize prices and enhance Bitcoin’s attractiveness as a reliable investment.

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Iliana Mavrou
Crypto Journalist
Iliana Mavrou
Crypto Journalist

Iliana is a experienced crypto/technology journalist covering the blockchain, regulatory, DeFi, and Web3 sectors. Prior to joining Techopedia, she contributed to several online publications including Capital.com, Cryptonews, and Business2Community, and more. In addition to her journalism work, she also has experience in technology and crypto PR. Iliana graduated with a BA in Journalism from City University of London in 2021. She is currently pursuing a Masters in Communications.