Encryption assets welcome a new round of pump, institutional funds become the main driving force

In the current era of intersection and integration between encryption technology and artificial intelligence, the stories that truly deserve attention often lie outside of hot topics. Bitcoin has recently set a new historical high once again, but this round of pump is fundamentally different from the past: the influx of large-scale institutional funds has replaced the frenzy of retail investors, becoming the main driving force of the market. Meanwhile, the shaking of confidence in the dollar and the positive changes in the regulatory environment together create a "perfect storm" conducive to the development of encryption assets.

The performance of Bitcoin is remarkable, not only breaking historical highs but also continuing to rise afterwards. It is noteworthy that this pump is not led by retail investors, but rather institutional capital has become the core driving force. In response to the prosperity of the encryption market, the US stock market has also seen a comprehensive rise, with both the Nasdaq and S&P 500 indices setting historical new highs, while the Dow Jones Industrial Average is also nearing its historical peak. This indicates that the market as a whole has entered a risk-on mode.

At the policy level, the United States has passed a new policy known as the "Too Big to Fail Act," which expands fiscal spending and the scale of debt. This move may weaken the credit of the dollar in the long term. As early as May, Moody's Ratings had already downgraded the rating of U.S. debt.

Compared to previous speculative cycles, the current rise of encryption assets is considered to have stronger sustainability. This is mainly due to the increase of encryption asset holdings on corporate balance sheets and the support of regulatory environments. However, the market may still face a correction, and the key lies in whether institutional investors can form effective price support.

More and more companies are beginning to hold Bitcoin on their balance sheets. Taking the software company Figma as an example, its Bitcoin holdings account for about 5% of its balance sheet. The motivations for companies to hold Bitcoin vary, including asset diversification, appreciation potential, and brand differentiation. However, it is important to note that Bitcoin is not suitable for all companies, and businesses need to fully consider their own risk tolerance and strategic objectives when making this decision.

Bitcoin exhibits unique mixed characteristics. When market risk appetite rises, it behaves like a tech stock and pumps; while in times of crisis, such as the recent trade war, it shows safe-haven properties similar to gold. This duality is both an advantage of Bitcoin and could also become a potential weakness.

Although the current market situation is optimistic, there are still some 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 disrupt the current pump trend. However, these risks do not seem imminent at the moment, and funds continue to flow into the market.

The large-scale influx of institutional capital is a notable feature of this round of encryption asset pump. In June, over 250 companies announced increased holdings in Bitcoin, with a total purchase of 68,000 BTC. Just last week, 54 entities added positions of 8,434 BTC, including design software giant Figma, which holds a Bitcoin ETF worth $70 million and plans to buy an additional $30 million. The Bitcoin ETF saw a net inflow of $1.6 billion from July 6 to July 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 the encryption asset market. First, the trust crisis in the US dollar and fiscal expansion have intensified investors' concerns about inflation, prompting them to turn to scarce assets, with Bitcoin having a greater scarcity than gold due to its fixed supply (21 million coins). Secondly, the global risk environment has eased, with signs of de-escalation in geopolitical conflicts, and inflation data from Europe and the US has also been unexpectedly mild.

The shift in the regulatory environment has also brought positive effects to the encryption asset market. The U.S. Congress is holding a "Crypto Week" event, and the House of Representatives is reviewing a series of key bills related to stablecoin frameworks and market structures. In addition, personnel changes in regulatory agencies have also released positive signals, with former Bitfury executive Jonathan Gould appointed as the head of the Office of the Comptroller of the Currency (OCC), indicating that policies may tend to become more lenient.

Overall, the current encryption asset market is experiencing a rise led by institutional funds, which is fundamentally different from the past bull markets driven by retail investors. Although the market outlook is optimistic, investors should remain vigilant about potential risks and closely monitor policy changes and the global economic situation.