Institutional investors' interest in Bitcoin continues to rise

Although the price of Bitcoin has fallen from its historical high in 2017, institutional investors' enthusiasm for investing in it continues to rise. Currently, the price of Bitcoin is around $9600, down 52% from the high of $20093 at the end of 2017. However, the scale of institutional funds investing in Bitcoin has significantly increased.

The main reasons for institutional funds flowing into Bitcoin in 2020 may be threefold: the positive attitude of well-known investors and institutions, the maturation of the Bitcoin market, and improvements in the fundamentals.

Institutional investment in Bitcoin is usually measured by the assets under management (AUM) of a certain asset management company, (. In the United States, due to the lack of Bitcoin ETFs, institutional investors primarily invest in Bitcoin through exchange custody and a certain asset management company.

A Bitcoin trust from an asset management company is an over-the-counter investment tool that allows investors to indirectly hold Bitcoin, reducing the risks of direct ownership. When Bitcoin reached its historical high in 2017, the trust's AUM reached $2.966 billion. As of June 23, 2020, this figure has exceeded $3.5 billion, representing an increase of nearly 20% compared to the peak in 2017.

It is worth noting that the number of institutions investing in this trust has significantly increased. In the first half of 2018, institutional investors accounted for 56%. By the first quarter of 2020, this proportion had risen to 88%. This indicates a significant increase in institutional investors' interest in cryptocurrencies.

![])https://img-cdn.gateio.im/webp-social/moments-324ae538712b9fe0c34097d82c85c34d.webp(

Some rating agencies believe that the "gate" for large institutions to enter the Bitcoin market has already opened. In the coming months, a shift in attitude from major financial institutions may further stimulate institutional activity.

Recently, some major financial institutions have shown a positive change in their attitude towards Bitcoin. Analysts at a large investment bank believe that Bitcoin has demonstrated resilience. According to reports, the bank has also opened bank accounts for cryptocurrency exchanges, increasing its support for the industry.

Some well-known billionaire investors have also begun to recognize Bitcoin's potential as a hedge against the inflation risk of fiat currency. Some investors have revealed that they have allocated 1% of their net worth to Bitcoin.

The maturity of the Bitcoin network is another factor attracting institutional investors. From June 2019 to June 2020, the hash rate of the Bitcoin network rose from 57 million TH/s to 105 million TH/s. Despite experiencing the third halving, the hash rate remained at a high level, demonstrating the resilience of the network.

In addition, the decline in the reserves of cryptocurrency exchanges also indicates a decrease in retail investors and an increase in institutional investors. This may lead to an increase in market share for exchanges focused on institutions, changing the dynamics of the cryptocurrency market.

![])https://img-cdn.gateio.im/webp-social/moments-ddcf487fd976f73b6b82ca4e75a1a4b7.webp(

However, not all financial institutions are optimistic about the long-term prospects of Bitcoin. Some institutions believe that hedge funds invest in cryptocurrencies mainly because of their high volatility, rather than their long-term investment value.

Overall, there are still differences of opinion among institutions and high-net-worth investors regarding the future development of Bitcoin. Some foresee that Bitcoin will become a mature store of value and a safe-haven asset, while others expect its rise to be limited. For investors, holding long-term may be the strategy to maximize investment returns, provided that there are no fundamental changes.