Against the backdrop of global economic instability and tightening monetary policy, Bitcoin's safe-haven properties have become increasingly prominent.
Whether it is the inflow of institutional funds or the change in the government's attitude towards cryptocurrencies, it suggests that Bitcoin is gradually moving from a fringe asset to the mainstream investment field.
The current market turmoil may be the best time to enter Bitcoin, the digital gold. Bitcoin is standing at a crossroads. Crisis, crisis, but there are opportunities in crisis.
It is like institutions and retail investors, who seem to live in different worlds, and their perceptions of the current market are completely opposite. Why is there such a big contrast between institutions and retail investors? Institutional investors are very optimistic about cryptocurrencies, and they have been buying them since the beginning of this year.
Various ETFs and companies have cumulatively purchased about 104,000 Bitcoins. It's worth noting that the Bitcoin network has only 'minted' 18,000 new Bitcoins this year. Retail investors, however, are immersed in disappointment. Bitwise @BitwiseInvest's Chief Investment Officer stated that according to the latest cryptocurrency sentiment index, retail investment sentiment is nearing historical lows.
Despite Bitcoin performing well, other crypto assets have shown disappointing results, with more altcoins including ETH registering negative returns, except for XRP, Solana, and BNB. Therefore, it is not surprising that retail sentiment is low.
However, Matt Hougan @Matt_Hougan believes that the spring of altcoins is about to arrive. Perhaps this is not just a consolation, and it might indeed be the case. However, I think there are better strategies available for retail investors. That is to follow strategies and learn from institutional investors.
In fact, following strategies is also becoming a choice for more institutions. According to surveys, this year, the percentage of institutional traders who have 'no plans' to participate in cryptocurrency trading has decreased from 78% last year to 71%. In other words, by 2025, it is likely that an additional 7% of institutional traders will start trading cryptocurrencies. This means that this year, about 29% of institutional traders may have started trading cryptocurrencies.
So, what are the institutional investors who have already started crypto trading doing? The question is, there are so many institutions, who should we learn from? However, you should also know that there are high-level institutional retail investors, as well as low-level retail-like institutions. For example, in recent days, retail-like institutions have begun to sell off Bitcoin ETFs, totaling over $500 million.
However, do not worry, the departure of retail-like institutions has not had a significant impact on the market. This is because large institutions have been taking advantage of the opportunities to accumulate after the decline in Bitcoin prices.
Data shows that on February 5, when Bitcoin trading prices fell below $97,600, large institutions bought over 39,620 BTC in one day, worth more than $3.79 billion.
I think we should learn from these institutions and buy when others are fearful. For example, Goldman Sachs @GoldmanSachs. As a leading global investment bank, Goldman Sachs has demonstrated extraordinary wisdom in contrarian investing throughout its history, especially during financial crises. During the 2008 financial crisis, Goldman Sachs made substantial profits by accurately judging the market and reallocating assets, buying undervalued assets during market panic. Its unique vision and firm belief allowed it to recover quickly and achieve significant growth after the crisis.
Additionally, Goldman Sachs has successfully invested in several emerging markets, such as its early optimism about the rise of the Chinese economy, which brought considerable returns. In the cryptocurrency sector, Goldman Sachs also laid the groundwork early on, launching cryptocurrency investment products that captured the growth potential of emerging assets like Bitcoin.
Goldman Sachs' investment philosophy emphasizes a long-term perspective and judgment of market cycles, firmly believing in contrarian investment strategies. Buying during market downturns and selling when overheated helps it navigate multiple market fluctuations steadily. Therefore, retail investors can draw lessons from Goldman Sachs' strategies, especially when market sentiment is low, daring to enter the market, seize investment opportunities, and gradually achieve capital appreciation.
In the fourth quarter of last year, Goldman Sachs accelerated its positioning, and describing it as a buying spree is not an exaggeration. In the fourth quarter of 2024, Goldman Sachs significantly increased its holdings in Bitcoin ETFs. Specifically, its holdings in BlackRock's iShares Bitcoin Trust rose from $600 million in the previous quarter to over $1.5 billion, an increase of 177%.
Goldman Sachs' investment in Ethereum ETFs surged from $22 million in the previous quarter to $476 million, an increase of 2000%. This remarkable increase demonstrates Goldman Sachs' strong confidence in the future growth potential of Ethereum. Specifically, Goldman Sachs purchased two major Ethereum ETFs: BlackRock's iShares Ethereum Trust and Fidelity's Ethereum Fund, with about half of the funds allocated to these two funds.
To summarize, Goldman Sachs has invested nearly $2 billion in cryptocurrency ETFs, with a ratio of 3:1 between Bitcoin and Ethereum. You should have no problem copying this for your homework, of course, you have the advantage over Goldman Sachs as you can directly buy spot assets.
Overall, Goldman Sachs' investment strategy fully embodies the wisdom of contrarian investing. Through precise market judgment and bold positioning, it has performed excellently in the cryptocurrency sector. For retail investors, emulating Goldman Sachs’ approach, especially being bold in entering the market during downturns, not only helps to seize investment opportunities but also can yield substantial returns during future market recoveries. Rather than going with the flow, it is better to leverage the successful experiences of institutions and adopt a more visionary investment strategy to steadily achieve wealth appreciation.
#GoldmanSachs #Crypto #ETF #BTC #ETH
