Editor's Note: This article comes fromCointelegraph Chinese (ID: CointelegraphChina), reprinted by Odaily with authorization.
Editor's Note: This article comes fromBTCCointelegraph Chinese (ID: CointelegraphChina)
, reprinted by Odaily with authorization.
Institutional investors have watched Bitcoin with mystification and entertainment for years, but barely participated. Although they were attracted by the high returns, they were intimidated by the lack of rules in the early days of Bitcoin and the countless headlines about hacks, bankruptcies and scams. In the early days, Bitcoin (
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Bitcoin investments before 2017
But a strange thing happened during the 2017 bull market. Many in the industry are buying Bitcoin on a personal basis through various means as institutions say it is too risky on a corporate level.
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The post-2017 bear market
During the bear market following the bull run in 2017, a large number of Bitcoin products were created and launched exclusively for institutional investors. Publicly traded bitcoin mining companies are beginning to offer investors exposure to the most fundamental parts of the industry.
Bitcoin assets are securitized so that investors on large exchanges can freely speculate on the price of Bitcoin without having to set up and use a Bitcoin wallet. Because the long-term appreciation value of speculative bitcoin is greater than the debt interest, companies began to borrow money to buy and hold bitcoin.
Bitcoin's Response to COVID-19
When Bitcoin fell and rebounded from lows around $4,000 in March 2020, the global COVID-19 pandemic was just getting started. Governments around the world have largely followed the same strategy - lockdowns and rampant money printing. Lockdowns, quantitative easing and fiscal stimulus have become the norm before markets fully digest what is happening.
The market becomes an inefficient price adjustment mechanism not because the participants act out of malice, but because the participants act out of the sheer belief that things won't go on like this for long.
With cash coming in every day, the market reacts almost every day without finding a worthwhile position for its capital. The market competes with itself in terms of the amount and velocity of funds deposited. When almost every economy and industry in the world is shrinking and global stock prices are soaring to record highs, what would a smart person invest in?secondary titleBuying and Holding Bitcoin in 2020
This time, when investors start paying attention again, everything is in place. Inside the main institutions are securitization products, exchange channels, priorities, experience and many enthusiastic supporters. The most important thing is the exchange channel. For the first time in the history of cryptocurrencies, investors will be able to safely and easily invest in Bitcoin using their usual instruments and exchanges without requiring any special approval. With the mechanisms in place, companies and investors can do what most investors should: buy and hold cryptocurrencies.
28th law
(In any set of things, the most important are only a small part, about 20%, and the remaining 80%, although the majority, are minor) or the inevitability of death and taxes.
The same is true in Bitcoin. Although there are many ways to make a lot of money from Bitcoin, mining, day trading, speculation, etc., for most people in the world, no matter who they are or where they are, the best investment strategy is It's buying and holding bitcoin.
The reason is obvious: Anyone can buy and hold Bitcoin, but almost no one can beat the market forever. The industry moves so fast that no one can keep track of what's happening now, let alone predict the future. You must understand and have deep exposure to cryptocurrencies to have a chance of beating the market odds. Even so, we’ve seen the true legends of the space blow out because they thought they could do better than just hold Bitcoin.
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Why BTC Mining Is More Profitable Than Just Holding Bitcoin
Mining has been the notable exception to the "buy and hold" rule throughout Bitcoin's history. If you can create a perfect blend of cheap energy and efficient mining hardware, bitcoin mining can be a profitable activity in almost any economic scenario and at any bitcoin price point.
To demonstrate this, we did an opportunity cost comparison, buying bitcoin or buying a bitcoin miner the same day Bitmain released the miner, running the miner at $0.06 in electricity costs, and selling enough Bitcoin to pay for electricity.
In each case, you end up earning more Bitcoin from mining than holding BTC.
