In recent days, Bitcoin has repeatedly tested the 30,000 mark, and its dominance (its share of the total market value of the cryptocurrency market) has also reached its highest level in the past two years, stimulating crypto investors to return to an optimistic momentum.
Data shows that on October 21, Bitcoin dominance (BTC.D) reached 52.72%, the highest level since April 2021. This surge in dominance can be attributed to the year-long rally. Bitcoin's price has soared 81% since the beginning of the year. Cryptocurrencies remain strong in current market conditions. Bitcoin is closer than ever to spot ETF approval and can, in a sense, serve as an ideological hedge against uncertainty on the world stage.
Perhaps it is precisely because of the optimistic long-term potential of Bitcoin that some major institutional investors have purchased Bitcoin in the past two years. MicroStrategy has always been a firm believer in Bitcoin. After purchasing 5,445 Bitcoins at an average price of $27,053 at the end of last month, the company currently holds a total of 158,245 Bitcoins, spending a total of more than $4.68 billion.
Although every time MicroStrategy announces that it will increase its holdings, it is a reassurance for most investors, the company has been in a state of "substantial floating losses" for a long time since the cryptocurrency entered the bear market in 2022, which inevitably makes everyone worry whether this will put MicroStrategy's assets in trouble.
But just this week, after Bitcoin challenged the $30,000 mark twice, MicroStrategy finally returned to the state of "floating profit" after a long absence. According to current data from Bitcointreasuries, MicroStrategy spent a total of about $4.68 billion to buy Bitcoin (average cost of about $29,582), and the current value has exceeded $4.74 billion. After MicroStrategy's Bitcoin holdings recovered, its co-founder Michael Saylor also issued a statement saying that betting on BTC is a good investment.
For investors unwilling to buy bitcoin themselves, buying shares of a public company that holds bitcoin can be a way to gain exposure to the asset without the hassle of arranging self-custody. Some experts believe that the extent of MicroStrategy's purchases of bitcoin already makes the company's shares a de facto bitcoin ETF.
At the same time, the adoption of Bitcoin is also expanding. In the field of digital payment and financial services, "American Alipay" Block (formerly Square) has become a major player in the crypto market with its unique advantages and strategies. They are working on building a Bitcoin mining system based on custom chips and open source forms, aiming to make mining more decentralized and efficient.
Thomas Templeton, General Manager of Block Hardware, said: “We want to make mining more decentralized and efficient, from purchasing, setup, maintenance to mining, because mining is about much more than just creating new Bitcoins, and will meet the long-term demand for a fully decentralized and permissionless future.”
However, the Bitcoin market still faces uncertainty. The 2022 cryptocurrency crash has caused huge value losses for companies holding Bitcoin, and some companies have been forced to sell part of their cryptocurrency holdings, including electric car maker Tesla.
Tesla joined the ranks of companies holding Bitcoin in December 2020, investing a total of $1.5 billion in the cryptocurrency, according to a filing with the U.S. Securities and Exchange Commission. Although Tesla CEO Elon Musk has said that Bitcoin can replace cash on the balance sheet, the company has made adjustments based on market conditions.
In July 2022, the company revealed in its quarterly update for the second quarter of 2022 that it had sold "approximately 75%" of its Bitcoin, with its balance sheet showing $936 million in sales from digital assets. In a call with analysts, Musk said, "It's important for us to maximize our cash position. We are open to increasing our Bitcoin holdings in the future, so this should not be seen as some judgment on Bitcoin." As a result, Musk still tops the list of the richest crypto tycoons.
Summarize
In summary, the investment behavior of companies such as MicroStrategy, Block and Tesla reflects the diversity of the cryptocurrency market and the existence of various strategies. Whether it is fixed investment, mining or hedging, companies and institutions choose different investment methods according to their own needs and goals. The continued development of crypto assets such as Bitcoin and their recognition by more and more institutional investors also show that they have long-term potential.
However, because these institutional investors control such a large amount of Bitcoin assets, each of their transactions is likely to have a significant impact on the Bitcoin market. Therefore, it is crucial for investors to always pay attention to and understand the dynamics of these crypto whales.
