Institutional investors' interest in Bitcoin continues to rise

Since the price of Bitcoin reached an all-time high in 2017, it has seen some decline, but institutional investors' enthusiasm for investing in it has continued to rise. Currently, the price of Bitcoin is around 9600 dollars, a decrease of 52% from the 20093 dollars peak in 2017, but the inflow of institutional funds has significantly increased.

The main factors driving institutional funds into Bitcoin in 2020 include: the optimistic sentiment of well-known investors and institutions, the increasing maturity of the Bitcoin market, and the continuously strengthening fundamentals.

The assets under management of the Grayscale Bitcoin Trust ( AUM ) are typically seen as an important indicator of institutional investor participation. When the price of Bitcoin reached a new high in 2017, the AUM of this trust was 2.966 billion dollars. As of June 23, 2020, this figure exceeded 3.5 billion dollars, a rise of nearly 20% compared to the 2017 peak.

The proportion of institutional investors in Grayscale products has also risen significantly. In the first half of 2018, the proportion of institutional investors was 56%. By the first quarter of 2020, this ratio soared to 88%. This indicates that institutional investors' interest in crypto assets has clearly intensified.

Recently, some major financial institutions have also changed their attitude towards Bitcoin. For example, JPMorgan, which was previously critical of Bitcoin, has recently given it a more positive evaluation. The bank's analysts stated that Bitcoin has shown resilience and has opened bank accounts for cryptocurrency exchanges.

Famous investor Paul Tudor Jones also stated that he allocated 1% of his assets to Bitcoin, believing it can serve as a tool for hedging against inflation risks. He specifically pointed out that the survival ability of Bitcoin is where its attractiveness lies.

From a technical perspective, the hash rate of the Bitcoin network has been continuously rising, increasing from 57 million TH/s in June 2019 to 105 million TH/s in June 2020, reflecting the ongoing expansion and maturation of the network. Even after the recent halving event, the hash rate quickly recovered, demonstrating the resilience of the network.

At the same time, the Bitcoin reserves of cryptocurrency exchanges have decreased, indicating a reduction in retail investor activity. This may lead to an increase in market share for exchanges focusing on institutional clients, changing the overall landscape of the cryptocurrency market.

However, not all financial institutions are optimistic about Bitcoin's long-term prospects. Goldman Sachs stated in a client meeting that hedge funds trade cryptocurrencies mainly due to their high volatility, rather than for viable investment reasons.

Overall, institutions and high-net-worth investors have differing views on the future development of Bitcoin. Some believe it will become a mature store of value and a hedge asset, while others expect its rise to be limited. For investors, maintaining a long-term hold in the absence of fundamental changes in the asset may be the strategy to achieve maximum returns.