The origination of Bitcoin was based on the ideals of decentralization. It was to be a currency that nobody owned or controlled. BTC is supposed to be the answer to the big question of who can be trusted!
Governments print trillions of dollars every year and citing them as liquidity infusion activities. It reaches only the top 10% of the population. Bitcoin was supposed to remove this bias. However, BTC is turning into the very notion it wanted to defeat.
Major financial institutions are accumulating Bitcoin
The accumulation of BTC is taking place at staggering rates. A recent statistic reveals the investment firm, Grayscale bought 18,910 Bitcoins since the BTC halving. The total number of Bitcoins mined since the halving is only 12,337.
Several other corporations are acquiring Bitcoins. Data released by analytics firm, Skew showed that the total open interest on the Bitcoin options that expired yesterday was 2000. And the notional value was over $250 million. It indicates that some corporations are investing millions of dollars into acquiring BTC.
Why is BTC accumulation by corporations a cause of concern?
Any financial instrument that is majorly controlled by a few shareholders is a risky proposition. Decentralization refers to the absence of any single entity controlling the asset.
However, with big corporations acquiring such large quantities of Bitcoin could have consequences. These corporations controlling BTC is a problem because it gives them the ability to affect prices drastically. Here is the BTCUSD daily timeframe.
The risk is not only limited to the change in BTC prices. If people lose trust in Bitcoin, its $170 billion market capitalization could vaporize quickly. And there are some reasons why this disaster could become a reality:
- The Quantum supremacy technology that is being developed by Google and various other research organizations could revolutionalize the financial world.
- Anti-regulatory laws prohibiting or curtailing the use of Bitcoins could cause a tremendous dip in BTC prices.