Institutional investors’ approach to Bitcoin differs.
Binance CEO Changpeng Zhao made important statements in an interview with Nick Schteringard.
Schteringard: Why do institutions buy Bitcoin? What drives the demand?
CZ: I divide institutional investors who buy bitcoin into three categories.
The first category is the group that buys the safe-haven asset, which includes investors like MicroStrategy. They are trying to protect themselves from inflation risks and move their corporate wealth to cryptocurrency by protecting its value. These guys just take and hold. Michael Saylor said they would last for 100 years. They are very good.
There is another group of institutional investors that look more like active traders. They exist in the stock market as professional traders. They now think that crypto is big enough and allows them to trade money. These are actively high frequency traders.
There is a third group that trades less, but still exists here to hedge. Tesla is probably one of these companies. They bought $ 1.5 billion of Bitcoin, but sold 10 percent to realize short-term profits. Medium term investors.
There are different reasons why institutions are turning to Bitcoin. Some are here for technology and innovation, some for the store of value.