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Institutional investment into the bureau! What are the recent investment hotspots and changes in the encryption industry?

In 2020, due to the new crown epidemic, the global economic slowdown has become an indisputable fact, coupled with the existence of uncertainties, institutional investors are scrambling to focus on the encryption world, the entire encryption industry market value increased 3.3 times in 2020.

Interest in Bitcoin and its derivatives has risen sharply, and institutional enthusiasm for encrypted assets is unprecedented, with major platform data showing a sharp increase in institutional users in 2020 from last year.

01. In the area of digital money

In the past two months, Bitcoin prices have been hitting record highs, attracting a large number of investors to buy, while more and more institutional investors have turned their attention from gold to encrypted assets such as Bitcoin to fight inflation. This also drives the entire encryption industry total market value to rise sharply.

Specifically, at the beginning of 2020, the total market value of the encrypted asset industry was only about $193 billion. Under the influence of the global new crown epidemic, a large amount of money printing and uncertainty in various countries, retail and institutional investors poured in, driving the market value of the entire encrypted asset market to a high of $730 billion.

Well-known investor Paul Tudor Jones and Stanley Druckenmiller, as well as large listed companies MicroStrategy and Square, are actively involved, and large hedge funds from Guggenheim to Renaissance Technologies are also seriously considering entering this area, which has boosted market confidence in the encryption industry.

02. In the area of project investment

Mainstream organizations have moved into the field of encryption, pushing the hot spots of major projects to a climax, from Bitcoin to a record high, Ethernet Square to follow Bitcoin up more than 300%, to the rise of Polkadot、Filecoin, to the Compound DeFi boom, the emergence of Sushiswap and the decentralization of exchanges Uniswap, and finally, to the king of decentralized capital management YFI、DeFi Prophet pioneers, The rise of these projects is inseparable from the participation of institutional investors.

2020 is an incredible year for institutional participants to enter the field of encryption. Apart from JPMorgan’s digital currency JPM Coin, which began testing global payments, it has created a new division that focuses on blockchain and digital money; standard chartered has been working on supply chain finance and payments; CitiBank and Deutsche bank has also added encrypted currency options to asset classes.

The admission of traditional large institutions represented by banks, and continuous investment in popular areas in the encryption industry and solutions under the new financial model, also allows investors to see the potential of major projects in the encryption market under the trend of strict global regulation.

03. Favor of DeFi harvesting institutional investors

Especially in the field of DeFi, which is characterized by Staking pledge and liquidity mining, institutional investors can see the innovation and flow value of investment mode in the field of encrypted assets. Top encryption capital, including P2PCapital Polychain、DRF、SNZ、KR1、Hypersphere Ventures、Web3.Capital、Coinbase Venture、Paradigm Capital、 distributed capital, Collaborative Funds and other institutions have entered the bureau, betting on DeFi.

Most institutional investors incubate DeFi projects in the form of special funds, that is, they are more involved in DeFi ecological and infrastructure construction through investment, incubation.

Since the second half of 2020, Total Value Locked in DeFi projects (TVL, the total locked value, refers to the total value of digital assets mortgaged by users in an encrypted card project) has continued to grow, and so far TVL continues to grow. This also injected more value into DeFi projects in 2021.

Moreover, in the view of institutional investors, the reasons for this growth are manifold, such as the continued development of liquidity mining, the initiative of investors to provide liquidity to various DeFi agreements (the hot “Yield Farming” concept), the rise of DeFi forecasters, and expectations for ethernet 2.0.

04.ETH of beacon chains and institutional investor bets

According to relevant data, the real capital of Ethernet Square increased by nearly 50% in January 2021, reaching a record high of about $70 billion. Over 10 per cent A 5 per cent surge in the number of addresses in 1,000 etheric workshops has resulted in 1241 wallets holding more than $13.8 million in ETH.

The CoinMetrics concluded that institutional investors began buying ETH. A big bet by institutional investors at this time ETH may be related to the launch of ethernet 2.0.

December 1, 2020, ETH 2.0 the official launch of the beacon chain, And started the creative block. The core of the beacon chain is to transform the consensus mechanism from PoW to PoS in This change in the underlying consensus mechanism is revolutionary, From the introduction of fragmentation, To gradually realize the full migration of data layer, application layer and value layer, To the EVM trip environment to eWASM, Will change Ethernet Square’s existing scalability and trading efficiency issues.

As we all know, at present, Ethernet Square carries most of the blockchain applications and encryption assets on the market, which leads to network congestion, high GAS costs, long transaction confirmation time and so on. Whether 2.0 online can effectively solve such problems remains to be tested in time. But overall, shortly, institutional investors have been buying large quantities of ETH, is also a good sign of the prospects of the chain.

05. Summary

Throughout 2020, during the new crown pneumonia pandemic, governments around the world, especially the United States, began printing money amounts of money, raising new concerns about financial health and prompting institutional investors to turn to encrypted currencies as an alternative asset.

Bitcoin’s value has begun to be recognized by mainstream institutional investors, and the fire of the project also shows us the power of change in the blockchain at another level.

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