Bitcoin has been pushed into the limelight in recent weeks by a number of high-profile companies investing in the cryptocurrency.
The bitcoin price has soared through 2020, climbing over 60% since January, however, the flood of recent groundbreaking announcements has failed to give bitcoin much of a boost.
Now, Bessemer Ventures, which counts cloud communications platform Twilio
“We strongly believe bitcoin will become a globally accepted asset class that institutions will increasingly seek portfolio exposure to given its asymmetric risk profile, scarcity characteristics, and ability to serve as a digital store of value,” Bessemer Ventures wrote in a blog post outlining its “thesis across the crypto landscape.”
“With the rapid expansion of central bank balance sheets around the globe, bitcoin is poised to serve as ‘digital gold’ and a hedge against future inflation,” the post, authored by four Bessemer partners, investors and advisors, read.
Bessemer has recently taken part in a $50 million fundraising round for New York Digital Investment Group (NYDIG), a subsidiary of New York-based asset manager Stone Ridge, Forbes revealed this week. NYDIG, formed in 2017 to “bring regulatory-compliant services to the institutional space,” is the custodian of Stone Ridge’s 10,000 bitcoin tokens, valued at $115 million at today’s price.
Bessemer, pointing to digital asset manager Grayscale reporting record inflows into its bitcoin fund quarter-after-quarter, now expects institutional demand for bitcoin to accelerate, partly due to the work done by NYDIG to create “a trusted custodian for digital assets.”
“Institutional demand for this emerging asset class has hit an inflection point,” according to Bessemer. “The technical hurdles and regulatory friction have made it difficult for institutions to invest and manage these new stores of value—until now.”
Elsewhere, Bessemer predicts the relatively small bitcoin options market, which has only emerged over the last couple of years, will continue to grow.
“Options only account for ~1% of the average daily trading volume for bitcoin today, relative to 20%-25% in more mature markets like equities, oil, and gold,” the Bessemer blog post read. “While still nascent today, derivatives trading is quickly emerging as one of the most exciting opportunities in crypto.”