From Exxon to Terraforms Labs, institutions pile into Bitcoin ahead of the next bull run
- Institutions like the Luna Foundation Guard and Exxon are keen on scooping up Bitcoin, fueling demand for the asset.
- Arcane Research revealed a spike in paper Bitcoin purchases as total BTC exposure in ProShares ETF hit a new all-time high.
- Caitling Long, Wall Street veteran argues Bitcoin price is lower than actual due to rise in paper BTC supply.
The Luna Foundation Guard lined up alongside other institutions who are looking to pile up their Bitcoin holdings. Proponents noted a massive spike in paper BTC as the total Bitcoin exposure of the ProShares ETF hit a new all-time high.
Bitcoin price is undergoing a supply shock
The Luna Foundation Guard is building a Bitcoin reserve fund worth $10 billion. The non-profit organization ranks in the list of institutions lined up to scoop up Bitcoin for their reserves or portfolios.
Do Kwon, CEO of Terraform Labs, outlined plans to increase Luna's Bitcoin reserves to $3 billion and accumulate $10 billion in Bitcoin in the long term. Kwon argues that Bitcoin reserves open a new monetary era for the Bitcoin standard.
$UST with $10B+ in $BTC reserves will open a new monetary era of the Bitcoin standard.
— Do Kwon (@stablekwon) March 14, 2022
P2P electronic cash that is easier to spend and more attractive to hold #btc
The funds for buying Bitcoin were raised by over-the-counter sales of LUNA and UST, Terra's algorithmic stablecoin.
Meanwhile, one of the world's largest publicly traded international oil and gas companies, Exxon, is diverting its excess natural gas for crypto mining operations. The oil and gas giant started a pilot program in North Dakota. As institutional demand for Bitcoin skyrockets, the giant is looking to set up similar mining operations in Alaska, Nigeria, Argentina, Guyana and Germany.
Interestingly, institutional demand for Bitcoin is being supplied with paper assets through exposure to ETFs like ProShares that trade on the NYSE. Based on data from Arcane Research, the total bitcoin exposure in ProShares ETF hit a record high above 28,000 BTC.
Strong inflows for over two weeks have pushed the Bitcoin ETF's exposure to a new all-time high. The rise in relevance of paper Bitcoin has troubled Wall Street veteran investor Caitlin Long.
Long commented on the phenomenon, revealing that paper assets create a fake supply that satisfies real demand, resulting in a drop in the asset's price.
1/ I DIDN'T SEE SOMETHING UNTIL NOW. Often I've spoken about paper assets creating a fake supply that satisfies real demand, & that (all else equal) this causes an asset's price to fall. Most recently this came up in a debate with @timevalueofbtc abt using #MVRV to value #bitcoin
— Caitlin Long ⚡️ (@CaitlinLong_) December 18, 2021
Long argues that Market Value to Realized Value (MVRV) is not the ideal metric to value Bitcoin. Realized Value of Bitcoin may not be appropriate as intermediaries run fractional reserves of the asset, and the number is likely inaccurate.
Long believes Bitcoin's true price is higher than its market price; however, there are more paper claims than real on-chain BTC, and investors holding the asset suffer the difference. The rise in paper Bitcoin could eventually create a massive supply shock in the asset, driving prices higher.
Analysts have evaluated the Bitcoin price trend and predicted a rally in the asset. FXStreet analysts believe the recent upswing has pushed Bitcoin price above its 50-day and 100-day Simple Moving Averages. Bitcoin price needs to overcome more hurdles, like the 200-day SMA in its climb to the psychological barrier at $60,000.
FXStreet analysts have explored the possibility of the Bitcoin price trend turning bearish and capitulating.
Author
Ekta Mourya
FXStreet
Ekta Mourya has extensive experience in fundamental and on-chain analysis, particularly focused on impact of macroeconomics and central bank policies on cryptocurrencies.
