A new law in Germany that allows Bitcoin investment to be made by Spezialfonds came into operation on Monday. In light of this, experts have predicted that the Bitcoin market may witness a $400 Billion Investment, courtesy of these investors. The new legislation will enable institutional investors to embrace Bitcoin investments, which was impossible prior to the law. However, only 20% of each institutional investor’s portfolio can be allotted to investing in Bitcoin, the new law provides.
According to the law, such investments will be regarded as Spezialfonds, which are specifically for investments outside traditional products. With the new law, over 4000 institutions in Germany now have the opportunity to invest in Bitcoin and other cryptocurrencies, but are only restricted to a 20% portfolio allocation.
Concerning the Bitcoin law, experts have reasoned that given that the law just came into effect, investors in the country will be reluctant to go ahead and invest in the digital asset. In the worst case scenario, they might just test the waters for fear of Bitcoin’s volatility. Accordingly, it might take up to a minimum of five years before the 20% allocation given to each Fund is completed.
Other institutional investors in Germany are yet to report their stance on the new provision. This definitely means that it may take long before institutional investors warm up to setting up Trusts or Funds for Bitcoin. Notwithstanding, the law is set to be a turning point for Germany. No matter how long it takes, institutional investors in the country will embrace Bitcoin as a store of value and a highly rewarding investment product.
Germany has always entertained a favorable disposition towards cryptocurrencies. In fact, in Germany, individual investors of Bitcoin are not taxed for gains on the asset as long as they have held it for more than a year. In contrast, institutional investors and businesses holding the asset class are taxed.
Bitcoin is the Choice of Institutional Investors
Despite the fears of volatility by German investors, this has not deterred a number of institutional investors around the world from creating cryptocurrency Trusts. Grayscale is leading the pace with its Bitcoin and Ethereum Trusts. In fact, Grayscale was recently joined by a US-based asset management firm, Wealthfront on both Trusts. According to reports, the latter has plans to expose its customers to both digital assets. Rothschild Investments also bought some shares out of Grayscale’s Ethereum Trust (ETHE) in a recent move.
Meanwhile, investors are extremely bullish on Bitcoin and have been accumulating the asset in bulk since the mid-May market crash. Bitcoin is currently trading at almost half its previous ATH. A bullish trend is in sight as investors have lately been moving their Bitcoin holdings off exchanges to cold wallets. While Bitcoin still remains the choice of most investors, it may soon lose its appeal as Ethereum is primed to overtake the flagship cryptocurrency by market cap in the coming months.
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