Source: 21st century economic report author: Hu Tianjiao editor: Li Yilin, as of 10:05, January 12, Beijing time, the price of bitcoin was US $34374.65, down 6.58% in 24 hours. In recent years, bitcoin has been surging up and down in the market. Where do these institutions and funds come from? How are they getting in and out? It has aroused great interest in the investment community. Although bitcoin is now “at a high level” along with its ups and downs, it is still some way from the final value predicted by major institutions. However, at the same time, there are also warnings that it is not known whether this push will be followed by another “tulip mania”. The characteristics of bitcoin’s market are: jumping up and down, breaking the record. Although bitcoin fell by 6.58% in the first 24 hours when the reporter sent the paper, it was still in a fierce rage. Earlier, bitcoin hit $41478 a day on January 8, setting a new record. But then, on January 11, it fell to $33000, the lowest since January 6. After rising 300% last year, bitcoin soared nearly 40% in the last week and broke through $40 million in two days at the end of last week. However, as the price reached $41000, bitcoin then dived from a high level, with a dramatic drop of about 20% in 24 hours on the 11th. Over the same period, there were 205000 people in the cryptocurrency market, with a total amount of more than 14 billion. Figures 1 and 2 show the trend of bitcoin price within January 11 and the market / picture source: in the turmoil of coindesk, there is no official information to show further action of institutional investors. However, large and small institutions have now set foot in the field of bitcoin in various forms, including allowing customers / users to pay with bitcoin, buying bitcoin directly, participating in the gray bitcoin Trust Fund (GBTC), and issuing bitcoin investment products on their own. Similarly, back in 2017, bitcoin prices soared to nearly $20000, then fell to a record low of $3122 in 2018. However, different from the passion of retail investors at that time, bitcoin’s participation since December last year has been dominated by investment banks, insurance companies and other large and small institutions. JP Morgan Chase, Fidelity Fund, square and Goldman Sachs are all in the team. According to the official website of bitcoin, 23 investment institutions hold more than US $50 million in bitcoin, with a total of 888864 bitcoin positions. Products include GBTC’s grayscale, which can be described as an early “tiller”. Gray fund companies currently hold 561000 bitcoins. In addition to GBTC, the company has also launched trust funds for cryptocurrencies such as Ethereum and rupiah, and a grayscale digital large cap fund containing mainstream currencies. Institutions have entered or increased their holdings of GBTC. According to the documents disclosed to the SEC by three arrows capital, a cryptocurrency hedge fund, by the end of 2020, it held 38888888 shares of GBTC, accounting for 6.1% of the total GBTC, an increase of nearly 85% compared with June 2020. In June 2020, three arrows capital held 21057237 shares of GBTC, accounting for 6.26% of the total GBTC. In addition to buying GBTC, many institutions are also directly starting with bitcoin and expanding and innovating bitcoin projects. MicroStrategy, a business analytics firm, topped the list with 70470 bitcoins. In addition, MicroStrategy announced on December 11 that it had completed a $650 million convertible bond issue and planned to invest $634.9 million of the corresponding proceeds in bitcoin. At the end of 2020, Morgan Stanley’s investment management department increased its stake in MicroStrategy to more than 10%, and now owns 792627 shares of MicroStrategy. In addition, other major holders of MicroStrategy include first trust advisors, BlackRock Inc. and vanguard group, according to data from the company. Square, an online payment giant, bought about 4709 bitcoins for 50 million US dollars on October 7 last year, accounting for 0.22% of the total amount of bitcoin. The company has also set up an independent team, square crypto, to take charge of bitcoin open source work. Meanwhile, it has launched the open patent alliance (Copa) of cryptocurrency to develop encryption innovation and protect patent inventions. On December 8, 2020, square announced its 2030 zero emission plan, launched the bitcoin clean energy investment initiative, and committed to invest $10 million to support the adoption of renewable energy in the bitcoin ecosystem. Skybridge capital, the fund manager, has invested $182 million in bitcoin and will launch its $310 million bitcoin fund L.P. in January this year. , which is expected to open to outside investors from January. Other investment companies are also “not willing to be outdone.”. Mass mutual, an American life insurance company, has bought 100 million bitcoin; luffer, a British asset management company, has added $747 million to its portfolio; The bitcoin Fund (qbtc. U) of 3iq, a Canadian fund management company, had a trading volume of more than $100 million on the Canadian stock exchange in October last year, and currently holds 16454 bitcoins. Fidelity Investment recently announced that it was raising its bitcoin investment plan. Musk indicated that it would consider bitcoin as compensation. Goldman Sachs gradually changed its skepticism towards bitcoin from the beginning of December Talk about bitcoin coexisting with gold. Bitcoin participating institutions / chart source: bitcoin treasuies if it’s another tulip mania? As of 18:00 on January 11, Beijing time, bitcoin prices were $35597.44. On whether there is the possibility that institutional investors will withdraw after pushing up prices, Yu Jianing, chairman of the block chain special committee of China Communications Industry Association and President of Huo coin University, told the 21st century economic reporter that the participation of professional investment institutions does not value speculative value, but recognizes the intrinsic value logic and future development prospects of bitcoin after in-depth consideration. “Before bitcoin ETF was recognized, many funds in the mainstream financial sector, including global large hedge funds, family trusts, institutional investors, family offices and retirement account funds, all hoped to hold certain digital assets to realize the custody of digital assets,” Yu explained. “On the capital side, institutions are abandoning traditional gold and choosing digital assets such as bitcoin as their capital As a hedge asset, more and more investment institutions are involved in the construction of bitcoin funds. ” “On the other hand, the current gray bitcoin trust is beneficial to the digital asset market to a certain extent, and there is no possibility of withdrawing. There are two bright spots in the investment terms of gray bitcoin Trust: firstly, gray bitcoin trust does not support share redemption, that is, once investors subscribe for Trust shares, their shares cannot be converted back to bitcoin. Secondly, gray scale collects 2% management fee from bitcoin trust every year as its revenue source. The management fee is deducted from the number of bitcoin held, that is, “currency standard” mode He added. In Jianing’s view, bitcoin’s recent correction of nearly 25% is reasonable. “Bitcoin has been relatively high before reaching US $42000 this round, and has been in a unilateral upward market. It is not normal that there is no significant correction. In the current high situation, the situation of unilateral rise will be less and less in the future, and the volatility will be significantly improved in the future. “One of the reasons for bitcoin’s rise this year is the continued decline of the US dollar index,” he said. “At present, the Biden administration is about to take office.” it’s good to do whatever is bad. “There is a possibility that the dollar will rebound in the short term. The global commodity assets have experienced a significant correction, which has led to the pressure on the digital asset market. These are all the hedging measures taken by overseas mainstream investment institutions. ”Although it is generally believed that retail investors are the main driving force for the sharp rise and fall of bitcoin prices in 2017, this does not seem to be enough to guarantee that the current dominance of institutional investment will definitely avoid bitcoin’s “fate in 2017”. Yu Jianing believes that the sharp fall in 2017 is a predictable adjustment of assets in its development cycle, and of course, it is also the embodiment of the “chasing up and killing down” style of retail investors as the dominant market. “At present, although the proportion of institutional investors is higher and higher, because the overall market value of the all digital asset market is only $1 trillion, which is too small compared with the traditional financial market, the temporary settlement of institutional capital profit will have a greater impact on the market price. Therefore, under the influence of institutional capital, the fluctuation of digital asset price may be more severe than before 。 “Digital assets already have strong financial attributes. Bitcoin can’t get rid of the cyclical law. If there is a rise, there will be a fall, and if there is a fall, there will be a rise. Therefore, any investor should take risk control as the primary goal,” he said. “At this stage, bitcoin has not reached the point of nationwide craziness in 2017, and the adjustment in recent days may be just a periodic return in development Tune. The rise in bitcoin prices is essentially a dividend of the global digital cycle, and the revaluation of its market value will be a long-term process. ” There are already signs that retail customers are becoming more interested in cryptocurrencies such as the special currency. PayPal Holdings Inc It has already allowed customers to buy, sell and hold bitcoin and other cryptocurrencies online; DBS of Singapore also launched bitcoin and other digital asset trading services to institutional investors in November last year. By the beginning of 2021, eToro bitcoin holders have increased by 61% compared with a year ago, while ethercoin holders have increased by 49% over the same period. Institutions have given bitcoin predictions that look “unreachable”. Apompliano, founder of Morgan Creek capital management, predicts that bitcoin will reach $100000 by the end of 2021. JP Morgan strategists have recently set a high long-term price target of $146000 for bitcoin, while Citigroup has offered a sky high price of $318000. It’s hard not to recall the “tulip mania” in Holland in the 17th century. At that time, tulip once caused an unusual frenzy in the flower market. Tulip bulbs were in short supply and the price soared. In Tulipomania, Mike dash wrote that during the tulip mania, the highest price of a tulip ball was 5 200 guilders, compared with 1600 guilders for Rembrandt’s masterpiece the night watch. “Due to the network effect, there are more and more ways to use bitcoin,” an investor who has long been concerned about bitcoin told reporters, “in the eyes of those who believe that the legal tender will inevitably depreciate, bitcoin is attractive because of its fixed amount. But some investment institutions, in the case of low interest rates and negative interest rates, are stimulated by the pursuit of capital interests, and begin to set foot in this field. But the problem with bitcoin is that there is no intrinsic value in its nature. ” There are doubters and warnings in the market since ancient times. American stockbroker Peter Schiff and economist Nouriel Roubini believe that bitcoin is a speculative asset with no intrinsic value, and its market bubble may burst sharply at some point. Matt Maley, chief market strategist at Miller Tabak asset management, pointed out that since 2016, bitcoin has fallen by 20% or more for 10 times, 30% or more for 7 times, and more than 48% for 4 times. Therefore, investors should not underestimate the volatility of bitcoin.