Ari Paul, the co-founder and chief investment officer of the cryptocurrency asset investment firm BlockTower Capital, has stated that institutional investors are increasingly buying Bitcoin (BTC) to protect their wealth.
In a new SALT Talks interview with John Darsie, Paul said institutions are taking a defensive approach when investing in the first and largest digital currency. He said their Bitcoin investment is not about getting rich, but about staying rich.
Ari Paul noted:
“We’ve been talking with a lot of billionaires in the financial world. It’s such an interesting shift in mindset. They are now thinking defensively. They are thinking enough of their billionaire buddies have 10% of their net worth in Bitcoin. If they don’t, they are thinking ‘Man, if Bitcoin does another 20X, I’m not invited to the parties anymore.
“I’m not in that rich club’, wherever they are in the hierarchy. So now they are thinking, ‘I need a passive allocation. I need 10% of my net worth in this just to keep up, just in case.’ It’s not about getting rich, it’s now about staying rich.”
Ari Paul added that the amount of data that indicate the entry of institutional investors into the Bitcoin bandwagon is overwhelming:
“We’ve seen tons of Bitcoin moving off exchange[s]. Every data point on this is massive institutional buying. You have some quantitative data. Things like inflows into Grayscale, which are inflows into the closed-end vehicle. That was I believe $3.8 billion in Q4 which was close to everything that have flown into Grayscale prior to that.”
According to Paul, the new category of investors will contribute to a long-term reduction in Bitcoin’s volatility:
“Those are very strong hand buyers. These are people who are looking to buy more on dips. These are people who are not going to sell with a change in trend. The volatility is not going away. You can’t have raging bull runs that take you 10x higher without volatility. The volatility will gradually fall as this institutionalizes [with] broader market participation.”