Behind the accelerated deployment of Bitcoin by institutional investors

In recent years, Bitcoin, as an emerging digital asset, has gradually moved from the margins to the mainstream, especially driven by institutional investors, and its market position has become increasingly solid. Institutional investors are accelerating their layout of Bitcoin, which has not only changed the investment landscape of Bitcoin, but also had a profound impact on the entire financial market. In this article, we will explore in depth the causes, impacts, and future development trends of this phenomenon.

First, the entry of institutional investors is an important sign of the maturity of the Bitcoin market. In the past, Bitcoin mainly attracted retail investors, and its volatility and technical barriers kept many traditional investors away. However, with the gradual standardization and transparency of the cryptocurrency market, more and more institutional investors have begun to realize the potential of Bitcoin. For example, in 2020, Paul Tudor Jones, a well-known hedge fund manager, publicly stated that he regarded Bitcoin as "digital gold" and allocated a portion of Bitcoin in his portfolio. This statement has attracted widespread attention, and many institutions have begun to re-examine the investment value of Bitcoin.

Next, institutional investors' layout of Bitcoin is also closely related to the global economic environment. In recent years, the global economy has been hit by the COVID-19 pandemic, and central banks around the world have adopted loose monetary policies to stimulate economic recovery. Under such circumstances, the return rate of traditional assets has generally declined, and investors have to find new means of preserving and increasing value. In this context, Bitcoin has become a new favorite of many institutional investors with its limited supply and decentralized characteristics.

For example, BlackRock, one of the world's largest asset management companies, began exploring investment opportunities in Bitcoin in 2021. Larry Fink, BlackRock's CEO, said that Bitcoin is a "global digital asset" and believes that it has great potential. This move not only brought more attention to Bitcoin, but also further promoted other institutions to follow up.

In addition, technological progress is also an important reason for institutional investors to accelerate their investment in Bitcoin. With the continuous development of blockchain technology, the security and liquidity of exchanges have been greatly improved, and institutional investors can enter the market more conveniently. The innovation of various financial products, such as Bitcoin ETF (Exchange Traded Fund), allows institutional investors to invest in Bitcoin in a simpler way, lowering the threshold for investment.

For example, in 2021, the first Bitcoin futures ETF was listed in the United States, attracting a large influx of institutional funds. This event is not only seen as an important step in the legalization of Bitcoin, but also marks a significant increase in institutional investors' recognition of Bitcoin. Many large financial institutions have launched related investment products to meet the growing needs of institutional investors. This series of changes has further enhanced Bitcoin's market position.

When analyzing the motivations of institutional investors to invest in Bitcoin, we cannot ignore the factor of risk management. In the current economic environment, many institutional investors are under pressure to diversify their portfolios. As a non-correlated asset, Bitcoin can effectively reduce the overall risk of a portfolio. Studies have shown that including Bitcoin in a portfolio can significantly increase risk-adjusted returns, which has led more and more institutional investors to consider Bitcoin as a long-term holding asset.

Of course, institutional investors also face many challenges in the process of investing in Bitcoin. The volatility of the Bitcoin market is still high, and sharp price fluctuations may affect the investment strategies of institutions. In addition, the uncertainty of regulatory policies is also an important factor that institutional investors need to pay attention to. The regulatory policies of various countries on Bitcoin have not yet been fully unified, which may cause investors to face different legal risks in different markets.

For example, in 2021, the Chinese government's crackdown on cryptocurrency trading caused sharp market fluctuations, affecting many institutional investors. This incident reminds us that despite the bright prospects of Bitcoin, we still need to be cautious and do a good job of risk control during the investment process.

In the future, it is worth our attention to see how institutional investors’ layout of Bitcoin will develop. On the one hand, as the market matures and regulation improves, institutional investors’ acceptance of Bitcoin will continue to increase. More and more financial products will be launched, further promoting the popularity of Bitcoin. In addition, the continuous advancement of technology will also provide more possibilities for the use of Bitcoin.

On the other hand, when investing in Bitcoin, institutional investors also need to pay close attention to market dynamics and flexibly adjust their investment strategies. The future of Bitcoin is full of uncertainty, and investors should remain vigilant and avoid blindly chasing market hotspots. At the same time, institutional investors should also actively participate in the construction of the Bitcoin ecosystem and promote the development of technology and applications to better cope with future challenges.

In general, the accelerated layout of Bitcoin by institutional investors is not only the inevitable result of market development, but also the embodiment of the progress of financial technology. As an emerging asset class, Bitcoin is redefining the boundaries of investment. We have reason to believe that with the participation of more institutions, the future of Bitcoin will be brighter. However, while pursuing returns, investors must also remain rational and cautiously deal with market fluctuations and challenges. Only in this way can they find their own investment opportunities in this rapidly changing market.

From a personal perspective, the rise of Bitcoin is not only a revolution in the financial market, but also a challenge to traditional investment concepts. In this era of information explosion, investors need to constantly learn and adapt to the new market environment in order to remain invincible in the fierce competition. Future investment is no longer just a game of funds, but also a deep understanding of technology, policies and market trends. Only with a comprehensive vision and flexible response strategies can we find the true value in this uncertain world.

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.

Institutional investors are increasing their holdings of Bitcoin and accelerating their layout of Ethereum! The halving of Bitcoin is not only a topic of concern to ordinary investors, but also a topic of concern to Wall Street and technology giants. According to recent news, CashApp and Grayscale purchased 52.56% of all newly mined Bitcoins in the first quarter of this year, of which 29.41% was purchased by Grayscale and 23.15% was purchased by CashApp.
Based on the current block production rate and block rewards of Bitcoin, Grayscale and CashApp purchased 47,600 and 37,500 bitcoins respectively in the first quarter.
CashApp is a payment-focused company controlled by Twitter CEO Jack Dorsey, which provides Bitcoin purchase services to the public. As we all know, Twitter is the most popular instant messaging software overseas and is an undoubted overseas "WeChat".
Jack Dorsey is well-known in the industry for being optimistic about Bitcoin. He even believes that any other digital currency, including Ethereum, is meaningless and only Bitcoin is needed.
With Jack Dorsey's vigorous promotion, CashApp has developed rapidly in the field of Bitcoin transactions. Therefore, it is not surprising that so many Bitcoins were purchased in the first quarter.
When it comes to Grayscale, we are more familiar with it. In my previous articles, I have introduced Grayscale's data many times to illustrate the investment situation of foreign institutional investors in digital currencies.
The data in the table below is Grayscale's report on the inflow of funds into its various digital currency assets in the first quarter.
From the above data, we can see three obvious patterns:
1\. In Grayscale's investment allocation, the ratio of Bitcoin to Ethereum is approximately 4:1. The funds used to purchase Bitcoin are approximately US$400 million, and the funds used to purchase Ethereum are approximately US$100 million.
2\.
Since January 28, 2020, the rate at which funds flow into Ethereum has begun to be much faster than the rate at which funds flow into Bitcoin. Especially after March 20, the rate at which funds flow into Bitcoin has hardly changed, while the rate at which funds flow into Ethereum has accelerated.
This shows that big funds and institutional investors began to turn their attention to Ethereum as early as two months ago. This is consistent with my view in yesterday's article "Bitcoin Returns to $10,000, Ethereum's Future Growth Potential Is Clearer". These big institutions even realized this earlier.
3\.
Please note the time points marked in red circles in the figure, which are every week from January 21st to March 10th. The reason why I marked those time periods is that funds continued to flow into Bitcoin in those weeks. The largest amount of funds flowed into Bitcoin on January 21st and January 28th. The amount of funds flowing into Bitcoin in these two weeks accounted for 50% of the first quarter.
So what is the price at which nearly 50% of institutional funds purchase Bitcoin? Let's look at the price chart on coinmarketcap.com below:
As we can see from the chart, the lowest price of Bitcoin during this period was $8,200, while the highest price was $9,100. Therefore, the price at which institutional investors entered the market in large numbers was not low. It is particularly noteworthy that after the sharp drop on March 12, Bitcoin once fell below $5,000 and hovered below $7,000 for a long time. This price was far lower than the price at which institutional investors once entered the market, but institutional funds did not join the pace of entering the market during this period.
I think this was mainly due to the stock market crash at the time. Investors were extremely cautious and even pessimistic about the future, so they mainly held cash instead of investing in the market. Therefore, in summary, institutional investors are still increasing their holdings of Bitcoin and are accelerating their layout of Ethereum.