The strategy to increase Bitcoin holdings is not a spur-of-the-moment decision but is based on a well-thought-out set of macro and micro strategic considerations.
Here are several core reasons for increasing Bitcoin holdings, progressing from macro to micro:
I. Macroeconomic strategic level: Responding to the global monetary and fiscal environment
1. Hedging against inflation and depreciation risks of fiat currency:
· Background: Global central banks (especially the Federal Reserve) have conducted unprecedented "quantitative easing" during the pandemic, causing balance sheets to swell dramatically, leading to market concerns about long-term inflation and declining purchasing power of currency.
· Role of Bitcoin: Bitcoin is known as "digital gold" due to its fixed total supply of 21 million coins. Unlike fiat currency, it cannot be infinitely printed, so it is seen as an ideal tool for hedging against inflation and sovereign credit risk. Companies holding Bitcoin essentially convert a portion of their cash reserves from depreciating assets into scarce, deflationary assets.
2. Responding to the extremely low or even negative interest rate environment:
· Background: For a long time, interest rates in major global economies have been at historical lows, and the returns on holding traditional safe assets like cash or government bonds are extremely low or even negative.
· Role of Bitcoin: Allocating part of the cash to Bitcoin is a "desperate" attempt to seek higher returns. Although Bitcoin carries extremely high risks, its potential upside far exceeds the nearly zero returns of cash sitting in banks. This is a survival strategy in a generally low-yield environment.
II. Asset allocation and financial optimization aspects
1. Improve balance sheet and capital utilization efficiency:
· Demonstration effect of early cases: MicroStrategy is a pioneer and evangelist in this regard. Its CEO Michael Saylor raised significant amounts of Bitcoin by issuing low-interest corporate bonds and utilizing idle cash on the balance sheet, causing the company’s stock price and visibility to soar, gaining far more attention and capital returns than its main business (commercial software).
· Strategy: For companies with strong cash flow but slowing growth, holding Bitcoin has become an active capital management strategy aimed at generating excess returns for shareholders. This may be more attractive (but also riskier) than stock buybacks or acquiring other companies.
2. Asset diversification, adding uncorrelated assets:
· Theory: Modern portfolio theory emphasizes that by adding new assets with lower correlation to existing assets, the overall portfolio risk can be reduced.
· Role of Bitcoin: Historically, Bitcoin has had a low correlation with traditional assets (such as stocks and bonds). Although its correlation with tech stocks has increased recently, many institutions still believe its long-term trends are driven by unique supply and demand logic, making it an effective diversification tool in investment portfolios.
III. Industry trends and future development aspects
1. Seizing the opportunity of future digital assets:
· Institutions generally believe that Bitcoin and cryptocurrencies are the core cornerstone assets of the future financial system (Web 3.0, Metaverse). Early positioning means entering a potentially explosive growth track ahead of time, occupying a favorable position. This is not only about financial gains but also a strategic move to avoid being left behind in the new era.
2. Meet client and shareholder needs:
· For asset management companies, funds, or ETF issuers (such as BlackRock, Fidelity), increasing Bitcoin holdings is due to recognizing significant client demand. Launching Bitcoin-related products can attract new funds, increase management fee income, and solidify their leadership position in emerging fields.
IV. Specific purchasing methods and advantages
Institutions increasing Bitcoin holdings do not rely solely on the "direct purchase" method, but also include:
· Direct Investment: Directly purchasing Bitcoin on exchanges or through over-the-counter (OTC) trading and storing it in custodial wallets. This is the most straightforward method.
· Bitcoin ETF: By purchasing spot Bitcoin ETFs (such as IBIT, FBTC, etc.) regulated by the SEC in the United States. This method provides significant convenience for institutions: no need to directly handle private key custody, complies with traditional securities trading habits, offers good liquidity, and is easy to account for and audit. This is currently the preferred method for most institutions, as it greatly reduces operational and technical barriers.
· Mining Investment: By investing in Bitcoin mining companies, indirectly gaining Bitcoin exposure and potentially obtaining a lower Bitcoin acquisition cost.
Summary
In summary, the strategy to increase Bitcoin holdings is a comprehensive decision, the main logic of which can be summarized as:
Amid increasing global macroeconomic uncertainty and concerns about currency depreciation due to excessive issuance, incorporating Bitcoin, a "digital gold" asset characterized by scarcity, global liquidity, and low correlation with traditional assets, into corporate financial management and asset allocation aims to hedge against inflation, optimize capital returns, achieve asset diversification, and strategically position for the future digital economy.
Important risk warning: Despite the many reasons mentioned above, Bitcoin's price is highly volatile, regulatory policies remain uncertain, and there are inherent risks such as technology and security. Increasing Bitcoin holdings is a high-risk, high-potential-return strategic move, and it is not without controversy.
