What is the logic of traditional capital investment in Bitcoin?

Yesterday, Bitcoin broke through $14,000 in one fell swoop, setting a new high this year. Although this price did not last for a long time before it fell back to below 14,000 US dollars, this new high has injected a boost into the circle. Especially when the prices of other tokens are constantly falling, Bitcoin’s thriving performance is even more amazing.

Many investors attribute Bitcoin’s recent frequent upward breakthroughs to the continuous increase of large institutions: MicroStrategy and Grayscale Capital.

Needless to say, MicroStrategy, this institution has frequently been exposed in the circle because of the recent continuous large-scale purchase of Bitcoin; Grayscale Capital is an established institution in the field of digital currency investment.

According to aicoin data, in October, Grayscale’s bitcoin holdings increased by approximately 24,416, and in the past five months, it has increased its holdings by approximately 120,000 bitcoins, an average of almost 20,000 per month.

If we look closely at the Bitcoin trend chart, we will find that since the end of July, the price of Bitcoin has been higher than $10,000, but institutional investors do not care about this and are still increasing their positions.

I have said in my article before that when a large institution invests in a product, liquidity, security and long-term profitability are the first considerations. Once an institution buys a product, it generally focuses on long-term benefits, and the long-term period can be as little as three to five years, and the long-term can be ten or even decades .

Institutions who buy Bitcoin without fear at more than $10,000 have a clear attitude that they are very optimistic about Bitcoin’s long-term performance .

Compared with institutions, we often see retail investors asking questions like: “Bitcoin is too expensive”, “Can Bitcoin rise to XXX next month?”, “Bitcoin is so high now, it will be Will not fall?”.

The fundamental reason why investors have these problems is to use short-term thinking to look at long-term assets such as Bitcoin. If we use short-term thinking to look at investment products, we must think about buying today and selling tomorrow, and we must pay attention to whether the price will rise or fall tomorrow.

This kind of investment thinking is actually inappropriate for assets like Bitcoin. We must take a long-term perspective when we look at Bitcoin. We cannot achieve the three or five-year thinking span of institutional investors, but at least one or two years of thinking span.

why? Because a big asset like Bitcoin must be fermented on a larger scale to show its value, and fermentation on a large scale takes time and accumulation.

So what is large-scale fermentation?

In this regard, MicroStrategy CEO Michael Saylor (Michael Saylor) recently made a very good comment. He stated that Bitcoin with a market value of $250 billion “can solve a problem worth $250 trillion.”

In his view, “99.9% of the world’s assets are’alternative’ assets.” These assets include “bonds, stocks, real estate, precious metals and derivatives, etc.”, and the total value of these assets is US$250 trillion.

In fact, if calculated according to Thaler’s standard, the value of these assets is far more than 250 trillion US dollars, and may be close to 500 trillion US dollars, because the global real estate market alone is worth 280 trillion US dollars.

And all these assets will depreciate because of the excessive currency issued by the Federal Reserve and global central banks. Thaler believes that the fundamental solution to this problem is Bitcoin, because its supply is limited and will not cause inflation.

Sailer is more optimistic that: “This is a forest fire, and MicroStrategy is the east wind to support the fire.”

If according to Thaler’s estimation, Bitcoin can solve the problem of $250 trillion in assets and spread 21 million bitcoins to $250 trillion, then the price of a bitcoin will reach an astonishing $12 million. The price is so high.

Whether Thaler’s point of view is appropriate for the time being, but his way of thinking represents the typical way of thinking of institutional investors: they are more inclined to view Bitcoin from a global and macro scene, so they see a bright future for Bitcoin. They will not care about the current market fluctuations, and instead buy bitcoins in large sums .

This point is worth learning from our retail investors.

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