Tag: sovereign wealth fund

Could Bitcoin’s Next Price Boost Come from $8.5T in Sovereign Wealth Funds?

Bitcoin has seen a massive inflow of capital from public companies and investors this year with almost $7 billion in Bitcoin currently held by 13 publicly listed companies—including Grayscale, Galaxy Digital, Microstrategy, and Square. Is it time nation’s began to benefit from BTC as well?

While the markets have been anticipating whether Bitcoin will receive a further piece of the $5 trillion sitting in company corporate treasuries, one prominent on-chain analyst believes BTC’s next boost is likely to come from sovereign wealth funds, around $8.5 trillion AUM being managed by nations.

Are Sovereign Wealth Funds Missing Out?

2020 has been the year of institutional maturity towards cryptocurrency and particularly towards Bitcoin as a reserve hedge, and the digital asset has seen tremendous growth amid the turbulence of the covid economy. Even billionaire hedge fund manager Paul Tudor Jones has stated that he has just over 1 percent of his assets in Bitcoin.

According to Jones, a British hedge fund manager with tens of billions of pounds under management, Bitcoin could trade at $40,000 to $50,000 within two years in the best-case scenario. Bitcoin (BTC) could see a fivefold increase in value in 2023, as traditional investors enter the market.

One on-chain analyst expects nation’s to follow the lead of the corporations and explained that there is currently $8.5 trillion being managed sovereign treasuries with little to no exposure to Bitcoin.

In a recent tweet, on-chain analyst Willy Woo said:

“We’ve talked about $5T of cash sitting in public company corporate treasuries. What hasn’t been talked about is the $8.5T sitting in sovereign wealth funds, i.e. ‘the wealth of nations’. Their exposure to Bitcoin is zero, their optimal portfolio will require it.”

If just a small fraction of AUM of these sovereign wealth funds were to be allocated towards Bitcoin, the pioneer cryptocurrency could see some serious capital inflow and an astonishing bull run in price.

While Woo is mostly correct in his assessment that these Sovereign Wealth Funds are not being invested in Bitcoin—interestingly, the government of Norway holds a 2% stake in Microstrategy, meaning that all Norwegians are also exposed to Bitcoin indirectly.

What’s next for Bitcoin Price?

Source: BTC/USDT Trading View

At the time of writing, the Bitcoin price is trading up over 2.8% in the last 24 hours at a current price of $11,732 which is a significant upswing after a recent low of $11,200.

Despite a short surge above the resistance level, the BTC price is currently testing the $11,750 major resistance and should it break through—Bitcoin will have to contend with the $12,000 resistance level which is historically one of it’s most contentious.

If Bitcoin were to break past and hold above the $11,750 resistance it will likely significantly influence BTC’s short-term outlook, but a rejection here could spark a far-reaching downtrend that degrades its current technical strength.  

Oman Government Buys Equity Stake In U.S Bitcoin Miner Crusoe

Oman Investment Authority disclosed on Wednesday that it bought an equity stake in Crusoe Energy Systems Inc.

Crusoe is a U.S software firm based in Denver whose mission is to help the oil industry reduce routine flaring of natural gas.

In April, Oman’s sovereign wealth fund participated in the $350 million equity round that Crusoe Energy Systems Inc. raised.

Chase Lochmiller, the CEO and Co-founder at Crusoe Energy Systems Inc., said that Crusoe would open an office in Muscat, Oman, to help deploy mining equipment and power generators for capturing gas at well sites.

The MENA region (the Middle East and North Africa region) accounts for about 38% of the world’s gas flaring — the burning of excess natural gas from oil fields. The practice has faced increased scrutiny for worsening climate change and releasing harmful greenhouse gases.

“We’ve always felt it was important for us to have a presence in the MENA region, given its share of global flaring. Having the buy-in from nations that are actively trying to solve the flaring issues is what we are looking for,” Lochmiller stated.

According to the report, Crusoe held a workshop in Oman on Monday with the country’s biggest oil producers, including OQ SAOC and Petroleum Development Oman.

Lochmiller disclosed that the first Middle East pilot will be launched by year-end or early 2023. Although the drop in Bitcoin prices “certainly impacts our top-line revenue, it doesn’t impact any plans for growth and expansion,” the executive stated.

Crusoe uses excess natural gas from energy operations to power data centres and crypto mining operations. The firm, which keeps all coins it mines, focuses on creating shops in remote areas where it’s not economically feasible to build infrastructure to cut gas flaring.

Ismail Ibrahim Al-Harthi, senior manager of technology investments at Oman Investment Authority, said that in the past, the Oman government signed an agreement with the World Bank’s initiative to end routine flaring by 2030. Al-Harthi further disclosed that the Oman government invested in Crusoe early last year, then increased that stake with the April round.

“Oman is committed to reducing greenhouse gases in line with the Paris climate agreement,” Al-Harthi said.

Crypto Climate Impact Under New Scrutiny

Cryptocurrency has come under fire for being energy-intensive and reliant on burning natural gas. Crypto mining is considered an energy-intensive actitivities, and in most cases, fossil fuels are burned to create that electricity, contributing to global warming.

The use of flare gas to mine cryptocurrency has been regarded as a win-win solution, which means less natural gas is wasted, and crypto mining is not burning extra fossil fuels.

Some oil and gas companies, such as ExxonMobil, have been working with Crusoe Energy Systems Inc. to turn wasted energy (flare gas) into electricity used to power thousands of crypto miners.

However, the process is under environmental scrutiny. Some climate experts argue that the idea that Crusoe uses gas that would otherwise go to waste does not negate the fact that it burns fossil fuel to mine crypto.

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