Institutional funds drive Bitcoin to new highs, the new bull run shows different characteristics

In the era where cryptocurrency intersects with artificial intelligence, the truly important stories are often hidden beyond the noise. Recently, Bitcoin's price has reached a new high, and the driving forces behind it are different from before: large-scale institutional funds are replacing the retail investment frenzy, and the weakening of confidence in the dollar, along with improvements in the regulatory environment, has together created a "perfect storm."

Bitcoin has not only broken historical peaks but also continues to rise, with this round of increases primarily driven by institutional capital rather than retail investors. At the same time, the U.S. stock market is also showing strong momentum, with both the Nasdaq and the S&P 500 indices reaching all-time highs, and the Dow Jones Industrial Average is also approaching its historical peak, indicating a clear risk appetite in the overall market.

From a policy perspective, the U.S. has passed a bill to expand fiscal spending and debt, which may weaken the long-term credit of the dollar. Notably, Moody's rating agency downgraded the U.S. debt rating in May of this year.

Compared to past speculative cycles, the recent rise in Bitcoin prices is considered more sustainable, mainly due to support from corporate balance sheets and a shift in regulatory attitudes. Nevertheless, the market may still experience pullbacks, and the key lies in whether institutional investors can form effective price support.

Some companies have started to include Bitcoin on their balance sheets. For example, the software company Figma holds Bitcoin, which accounts for about 5% of its balance sheet. The motivations for companies to hold Bitcoin include asset diversification, appreciation potential, and brand differentiation. However, Bitcoin is not suitable for all companies, and businesses need to consider their own risk tolerance and strategic goals when making decisions.

Bitcoin exhibits a unique blend of characteristics: during risk appetite cycles, it rises like technology stocks; while in times of crisis, such as the recent trade war, it shows safe-haven properties similar to gold. This dual nature is both an advantage of Bitcoin and could also become a potential weakness.

Despite the favorable current situation, there are still potential risks. The Federal Reserve may unexpectedly raise interest rates, regulatory policies may tighten, or geopolitical "black swan" events may occur, all of which could interrupt this rally. However, these risks do not seem to be imminent at the moment, and funds continue to flow into the cryptocurrency market.

The massive influx of institutional capital is a key factor driving the price increase of Bitcoin. In June, over 250 companies announced their increased holdings of Bitcoin, purchasing a total of 68,000 Bitcoins. Just last week, 54 entities added 8,434 Bitcoins to their positions, including design software giant Figma, which holds $70 million worth of Bitcoin ETFs and plans to purchase an additional $30 million. Bitcoin ETFs saw a net inflow of $1.6 billion between July 6 and 11, with a single-day inflow of $1.18 billion on July 10, marking the second highest in history.

From a macro perspective, several factors are favorable for Bitcoin: firstly, the trust crisis in the US dollar has intensified inflation concerns due to fiscal expansion, prompting investors to turn to scarce assets, and the total supply of Bitcoin is fixed at 21 million coins, making its scarcity even greater than that of gold. Secondly, global risks have eased, geopolitical conflicts have calmed, and inflation data from Europe and the US has also been unexpectedly mild.

The friendly shift in the regulatory environment is also an important factor. The United States is holding "Cryptocurrency Week," during which the House of Representatives will review key bills such as the framework for stablecoins and market structure. Additionally, former Bitfury executive Jonathan Gould has been appointed as the head of the Office of the Comptroller of the Currency (OCC), indicating that policies may be further relaxed.