In today's digital era, a large number of investment institutions have entered the Bitcoin market. What does this phenomenon mean? Let’s dive into this fascinating topic.

As Bitcoin gradually becomes the focus of the investment community, more and more institutional investors are beginning to turn their attention to this virtual currency. What is the deep meaning hidden behind this trend? Let's analyze it from multiple angles.

First of all, from an investment perspective, the purchase of Bitcoin by a large number of investment institutions means recognition and optimism of the future potential of this digital asset. As a decentralized digital currency, Bitcoin’s fixed total amount and decentralized characteristics make it the first choice for safe-haven assets. As global economic uncertainty increases, investors are increasingly seeking safe-haven assets, and Bitcoin's scarcity and inflation-resistant properties make it an ideal choice. For example, during the 2020 COVID-19 epidemic, large-scale money printing by global central banks led to increased inflationary pressure, and many investors turned their funds to cryptocurrencies such as Bitcoin to resist the risk of inflation.

Secondly, from a market perspective, the influx of institutional investors will inject more funds into the Bitcoin market, driving its market value to continue to rise. According to statistics, institutional investors have increased their holdings of Bitcoin by a staggering amount in the past year. This large-scale capital inflow not only boosted the price of Bitcoin, but also brought more attention and confidence to the entire cryptocurrency market. In addition, the involvement of institutional investors can also help improve market liquidity, reduce price fluctuations, and lay a more solid foundation for the long-term development of digital assets such as Bitcoin.

Furthermore, from a technical perspective, institutional investment in Bitcoin also means recognition and promotion of blockchain technology. As the underlying technology of cryptocurrencies such as Bitcoin, blockchain has the characteristics of decentralization, high security, and strong transparency, and is considered an important direction for the future development of financial technology. With the influx of institutional funds, the innovation and application of blockchain technology will be further promoted, injecting new vitality into the development of the digital asset market. For example, some financial institutions have begun to explore the use of blockchain technology in cross-border payments, digital identity authentication and other fields, indicating the broad application prospects of blockchain technology in the financial industry.

In addition, institutional investment in Bitcoin also means the gradual maturity and standardization of the digital asset market. As the regulatory environment gradually becomes clearer, more and more institutional investors are willing to get involved in the digital asset market. The standardization of supervision will bring more compliant participants to the digital asset market and promote the healthy development of the market. At the same time, the involvement of institutional investors will also promote the continuous improvement of market transparency and standardization, providing investors with a safer and more reliable investment environment.

To sum up, the significance of a large number of investment institutions purchasing Bitcoin is rich and far-reaching. This not only means optimism about the potential of Bitcoin, but also reflects the trend of the digital asset market gradually becoming mature and standardized. With the advent of the digital golden age, we have reason to believe that Bitcoin will play an increasingly important role in the future financial world. Let us wait and see and witness the booming development of the digital asset market!

The four most famous international exchanges:

Binance INTL	OKX INTL	Gate.io INTL	Huobi INTL
China Line　APP DL	China Line　APP DL	China Line　APP DL	China Line　APP DL

Note: The above exchange logo is the official website registration link, and the text is the APP download link.

At the beginning of last year, amid continued global inflation, many institutions were increasing their investments in Bitcoin, such as MicroStrategy Inc, which expanded its investment in Bitcoin, and Square
Inc has also invested heavily in Bitcoin. In fact, there are two basic reasons for a thing to be valuable. The first is its performance, and the second is consensus. The most important thing is consensus, because from the perspective of the process of value generation, performance itself cannot Determine value. Many investors still don’t know what it means for investment institutions to purchase Bitcoin in large quantities? Let the editor of the currency circle tell you about it below.

 What does it mean for investment institutions to purchase Bitcoin in large quantities?

The thinking of large institutions when investing in a certain asset is different from the thinking of ordinary investors. Institutional investment is to establish an asset portfolio based on the performance of the market asset correlation coefficient. If an asset shows a change in the asset correlation coefficient, some institutions will invest passively even if they do not like the asset. Alternative assets are also important in the market correlation coefficient. Therefore, some institutions have also done Bitcoin allocation before, but the amount was not large. This year, against the background of global inflation, the consensus on Bitcoin has expanded and the asset correlation coefficient has increased.

The entry strategies of institutions are different from those of ordinary investors. Roughly speaking, after the institution's group meeting decides whether to invest in a certain target, the scale of investment and other frameworks, an investment plan is drawn up and then executed by specific traders. In this process, large institutions will not care about whether they bring other retail investors to the sky when executing the planned deployment, but only consider whether to complete the goal. This situation completely changes the rhythm of the entire market.

During the recent rise of Bitcoin, there have still been many liquidations. This is mainly because many traders are still using the old market thinking to observe, hoping to benefit from the volatility. However, the structure of the entire market has been changed due to institutions. The entry strategy changes.

 Why do investment institutions buy Bitcoin in large quantities?

Bitcoin has several major characteristics, such as decentralization, non-tampering, point-to-point transfers, limited quantity, etc.; the non-tampering characteristics not only make Bitcoin impossible to counterfeit, but also lay an important foundation for the property of blockchain technology to confirm the authority. The characteristics of point-to-point transfers make it possible to transfer money around the world without any hindrance. For small-amount transfers, the cost of Bitcoin transfers is higher, but when it comes to cross-border transfers of huge amounts of money, Bitcoin can show its advantages. The limited quantity makes its scarcity more and more prominent as the consensus increases.

Many years ago, Shi Hanbing once said in the "Financial Eyes" program that although the bubble in the Dutch tulip incident was exaggerated, tulips can still be viewed, and what can Bitcoin do? This is the poor understanding caused by not knowing the performance of Bitcoin.

There is no doubt that Bitcoin definitely meets the conditions of being valuable in terms of performance alone. However, the price of Bitcoin is unstable and has many shortcomings as a payment instrument. The more important question now is why so many institutions are buying it? Why is Bitcoin valuable?

The main reason for the rise of Bitcoin this year is that mainstream financial institutions in the United States, represented by Grayscale, have increased their holdings in large quantities. Generally speaking, global inflation, Africa has begun to use Bitcoin to hedge risks, and countries such as Iran use Bitcoin as strategic material reserves. , Paypal supports Bitcoin payment and other events, which have expanded the consensus basis of Bitcoin, so institutions have the basis for large-scale intervention.

From a longer-term perspective, third world countries lack financial infrastructure, and the digital economy is an important way to integrate their resources. It turns out that the cost of building a bank in underdeveloped areas is very high, so the financial infrastructure is weak. However, in the digital economy, only a mobile phone can achieve financial access, and its development prospects are unlimited. Therefore, it is not unusual for institutions to rush into the cryptocurrency market. Instead, it should be a matter of course.

The above is the detailed explanation of the editor of the currency circle on what it means for investment institutions to purchase Bitcoin in large quantities. In fact, many large institutions pay more attention to the trading of digital assets. At present, DeFi has not yet been integrated. Now we are in a situation where institutions buy coins and DeFi engages in technology. It seems like each one is playing its own game. Bitcoin can design many financial products, but we now need to integrate more assets into DeFi. Only in this way can the entire DeFi grow and become the cornerstone of financial technology. No one knows how much value space will be created in DeFi in the future. We can wait and see.