Editor's Note: This article comes fromChain reference (ID: lianneican), Author: Internal Reference Jun, reprinted by Odaily with authorization.

Editor's Note: This article comes from

Chain reference (ID: lianneican)

Chain reference (ID: lianneican)

, Author: Internal Reference Jun, reprinted by Odaily with authorization.

In the past few days, Bitcoin has continuously set new historical highs, reaching as high as $24,220. Bitcoin is up more than 240% this year.

Some institutions said that since November this year, fund products investing in gold have been reducing positions, and some funds have flowed to Bitcoin. JP Morgan strategists pointed out in a recent report that the trend of investing in Bitcoin is gradually shifting from family financial institutions and wealthy investors to insurance companies and pension funds, although these insurance companies and pension funds are unlikely to overestimate Bitcoin. configuration, but even a small amount of money entering the market can have a major impact.

Bitcoin hit a record high this time, which is fundamentally different from the previous record high. The record high in 2017 was purely the result of speculation by speculators, and the new high after a full three years, we see that on the basis of the recognition of the value of Bitcoin, traditional financial institutions, coupled with economic downturn, fringe It is the result of the combined effects of political and other external environmental stimuli.

This also determines that this bull market will go more stable and longer. There are the following factors that Mr. Internal Reference should focus on analyzing here, which will also give you firm confidence in investing in Bitcoin.

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Internal power: the value of Bitcoin is recognized

The rise of Bitcoin this time is generally based on a supply and demand logic of "rare things are more expensive". The total amount of Bitcoin is scarce, and there is only a total limit of 21 million. And every time after halving, there will be a round of rising market. In May this year, Bitcoin mining rewards were halved for the third time, and the output was reduced from 12.5 to 6.25 BTC, which intensified the market's tight expectations for its supply and demand. .

Therefore, value consensus is the capital for Bitcoin to challenge gold. Just like electronic payments: When people believe that the numbers in electronic bank accounts can be exchanged and withdrawn, these numbers have value.

He explained that bitcoin is still a relatively small asset class, mostly favored by millennial investors, and that it doesn't have much influence in financial markets, as traditional investors typically choose physical gold as their wealth reserve.

While Novogratz has been supportive of widespread digital currency adoption and sees greater upside for bitcoin, he also emphasized that bitcoin won't be used in everyday transactions anytime soon. "Bitcoin is like digital gold and it's going to go higher. More and more people are using it as part of their investment portfolio," he said.

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Continued momentum: more traditional financial institutions pour in

Since the beginning of this year, traditional Wall Street financial companies have entered the game one after another. About 15% of fund managers said bitcoin was the third-crowded trade right now, behind long tech stocks and short the dollar, according to a survey conducted by Bank of America between Dec. 4 and Dec. 10. These fund managers manage $534 billion in assets.

Guggenheim Partners LLC, for example, is one of the institutional investors eyeing cryptocurrencies, and the institution recently said it may invest as much as 10 percent of its $5.3 billion Macro Opportunities Fund in one bitcoin. Trust funds; Hedge fund magnate Paul Tudor Jones has also jumped on the bitcoin investment bandwagon.

It is reported that Ruffer Investment Management, a large British investment institution, will switch 2.5% of its managed assets to Bitcoin to diversify its investment in anti-inflation bonds such as gold. MicroStrategy, a database software company listed on the US stock market, also began to invest heavily in Bitcoin in July this year. Some people believe that the company's investment in Bitcoin largely represents the attitude of several traditional financial giants. Among the top ten shareholders of MicroStrategy are BlackRock Assets, Vanguard Fund, Renaissance Fund, etc.

Some Wall Street institutions that are limited by compliance requirements and cannot directly invest in encrypted assets have begun to deploy through such trusts. Among such trusts, Grayscale Trust has been in the limelight this year. Institutions dominate the investor composition of Grayscale Fund.

Grayscale Bitcoin Trust (GBTC) is the largest encrypted digital asset trust product under Grayscale. The GBTC fund is similar to an ETF fund, but there is no redemption mechanism, and there is a 6-month lock-up period for sales in the secondary market. GBTC's primary market subscription is only open to qualified investors. According to the third quarterly report, 80% of customers are institutional investors (mainly hedge funds), so it is a good indicator for observing the entry of institutional funds. Grayscale has accumulated 115,236 bitcoins in the fourth quarter of this year, equivalent to 2.2 billion US dollars, and the bitcoin liquidity crisis is coming.

PayPal's new cryptocurrency service brings more liquidity to Bitcoin. The service enables PayPal account holders in the United States to buy, hold and sell cryptocurrencies on PayPal. This development makes the cryptocurrency a source of e-commerce funding for its 26 million merchants. PayPal’s announcement caused Bitcoin’s price to jump more than 5% on the day and surpass $12,400. PayPal's support for cryptocurrencies has had a huge impact in the market as it has driven the use of virtual currencies around the world and accelerated the adoption and use of new digital currencies.

The consensus in the industry is that encrypted assets have already withdrawn from the competition with fiat currency, and the supervision from global regulators will be stricter. Bitcoin does have a huge bubble, but its attributes have changed.

Next, there are two more positive benefits that are worth looking forward to. Chicago Mercantile Exchange, the world's largest and most diverse derivatives marketplace, has announced its intention to launch ether futures starting on February 8, 2021, pending regulatory review. Ethereum futures will join CME Group’s bitcoin futures and options. Bitcoin futures on the Chicago Mercantile Exchange (CME) are approaching their third anniversary as a number of players, including institutional investors, have significantly increased their adoption of the currency.

Last but not least is the two-day Fed meeting on December 15-16. US regulators kept key interest rates at record low levels (0-0.25% range). FRS also maintained a $120 billion monthly asset buyback program with the potential to increase it if necessary.

Finally, the most important thing to say is that the recent frequent Coinbase IPO event may be a milestone in the development of Bitcoin. The Coinbase listing could set the stage for future growth across the industry. Industry insiders pointed out that this is a milestone for the industry and a new stage of economic legalization. It confirms that the industry is maturing and puts strong players on the radar. This validates that cryptocurrencies are not just a speculative game started in a garage by a bunch of ardent tech geeks."As the traditional financial order urgently needs a new round of deconstruction and reshaping, the central banks of many countries maintain a positive attitude towards the establishment of a digital currency system. CME) will launch Ethereum futures products on February 8, 2021, or Singapore and Hong Kong will begin to approve compliant encrypted digital currency trading services. These series of measures are all for the compliance of Bitcoin transactions Continue to add guaranteed support."

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External motivation: Multiple uncertain factors stimulate

In JPMorgan's last Flows and Liquidity Report of the year, quantum strategist Nikolaos Panigirtzoglou wrote that as the year draws to a close, look at how the investment landscape has changed over the course of 2020, or put another way,

How have different asset classes and types of investors performed over the year in terms of overall growth, impacted by the impact of the global pandemic and policy responses?

As Panigirtozglou wrote in its annual review, the most notable increase in 2020 is total debt outstanding, which has risen by about $14tr in the first half of 2020, and the bank now expects 2020 Total debt grew by $21tr, reflecting in particular continued strength in bond issuance. Of that, bonds accounted for about $13 trillion in growth, reflecting sharply higher government deficits as they tried to smooth the impact on revenues, and record corporate bond issuance as companies sought to boost their cash cushions against cash flow shocks. The rest is a combination of bank loans, bills and other short-term bills, emerging market municipal bonds and other non-market debt.

Another way of saying this is that in order to maintain the fiat currency system, central bankers had to print fiat currency in large quantities, and they devalued assets by 40% in just half a year.

However, in the context of low global interest rates, many institutions hope to obtain excess returns through encrypted assets. At present, the nominal dollar market value of Barclays’ global negative-yield bonds has expanded to nearly 17 trillion U.S. dollars, a new high this year and the highest level since September 2019.

According to statistics, the scale of global national debt with negative real yields has doubled in the past two years to 31 trillion US dollars. This means that if the nearly $17 trillion in bonds are held to maturity, investors will lose money instead of making money.

BlackRock even predicts that in the next five years, the long-term national debt of major developed countries may maintain negative interest rates (the debt pressure is huge), and the pursuit of yield will cause institutional funds to rotate out of bonds and turn to gold, Bitcoin and other non-interest-bearing assets. non-traditional assets.

In the spring of 2020, the first wave of the new crown pneumonia epidemic was raging, and the second wave of the new crown pneumonia epidemic was even more harmful. Since September 2020, the economies of the developed world have stalled again, requiring monetary central authorities to provide more fiscal stimulus and once again raising the risk of inflation in several major fiat currencies and the risk of a deepening global recession. All of these risks pose a serious threat to the safety of investor funds that are primarily deployed in fiat currencies. But money invested in stocks and bonds won't be protected from losses if demand doesn't recover quickly.

Write at the end:

Especially the second wave of Covid-19 in Europe also played a role in the growth of Bitcoin in October. High levels of market uncertainty and overall economic conditions are forcing investors to move assets to safer places to protect their savings from possible inflation.

Since Bitcoin is often referred to as "digital gold" and is considered the most widely used cryptocurrency in the world, it offers an attractive long-term investment compared to cash. Like investors, households bracing for the potential devaluation of central bank fiat currencies also see bitcoin as a safe alternative to savings.

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