Behind Bitcoin's Return to Highs: Institutional Capital Becomes the New Driving Force

Bitcoin has recently reached a new historical high and continues to rise. Unlike in the past, this time it is not led by retail investors, but driven by large-scale institutional capital. Meanwhile, the US stock market has also generally strengthened, with both the Nasdaq and S&P 500 indices hitting new highs, and the Dow Jones Industrial Average approaching its historical peak, indicating that the market as a whole has entered a risk-on mode.

On the policy front, the United States has passed a bill to expand fiscal spending, which may weaken the long-term credit of the dollar. As early as May, Moody's had downgraded the rating of U.S. Treasury bonds. Nonetheless, analysts believe that this round of Bitcoin's rise is more solid than past speculative cycles due to corporate balance sheets and regulatory support. However, the market may still experience a correction, and the key lies in whether institutional investors can form effective price support.

Some tech companies have begun to include Bitcoin on their balance sheets. For example, the software company Figma holds about 5% of its total assets in Bitcoin. The motivations for these companies to hold Bitcoin include asset diversification, appreciation potential, and brand differentiation. However, Bitcoin is not suitable for all companies, and businesses need to weigh their own risk tolerance and strategic goals when making this decision.

Bitcoin exhibits a unique hybrid characteristic. When market risk appetite rises, it behaves like a tech stock and rises; during crises, such as the recent escalation in trade frictions, it demonstrates safe-haven properties similar to gold. This dual nature is both an advantage of Bitcoin and could also become a potential weakness.

There are potential risks in the current market, such as the Federal Reserve possibly raising interest rates unexpectedly, tightening regulatory policies, or the occurrence of geopolitical "black swan" events, all of which could interrupt the upward momentum of Bitcoin. However, these risks do not seem imminent at the moment, and funds continue to flow into the cryptocurrency market.

The large-scale influx of institutional capital is an important factor driving the rise in Bitcoin prices. In June, over 250 companies announced increased holdings of Bitcoin, totaling 68,000 coins. Last week, 54 entities added 8,434 Bitcoins to their positions, including design software giant Figma, which holds a Bitcoin ETF worth $70 million and plans to purchase an additional $30 million. The Bitcoin ETF 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.

The macroeconomic environment has also provided a favorable outlook for Bitcoin. The escalating trust crisis in the US dollar and the fiscal expansion have raised concerns about inflation, prompting investors to turn to scarce assets. The total supply of Bitcoin is fixed at 21 million coins, making its scarcity even greater than that of gold. In addition, geopolitical conflicts have eased, and inflation data from Europe and the US has also unexpectedly softened, all of which have reduced market risks.

The shift in regulatory attitude has also injected positive factors into the Bitcoin market. The U.S. House of Representatives reviewed important legislation this week regarding stablecoin frameworks and market structure. In terms of personnel changes, former executive Jonathan Gould has been appointed as the head of the Office of the Comptroller of the Currency (OCC), which is seen as a signal that policies may be relaxed.