Who is driving the new high of Bitcoin? Institutional interest is beginning to show, retail investors are still the main force.

This week Bitcoin surged to a new all-time high, once again sparking discussions in the market about the role of institutional investors in driving up its price. Analysts believe that the involvement of institutional investors is still in the early stages. As the largest cryptocurrency by market capitalization globally, Bitcoin initially broke through the $123,000 mark this week, setting a new all-time high. Expectations of favorable cryptocurrency policies from the US government have provided momentum for its rise. Analysts say that despite the increasing popularity of digital assets, the demand from institutional investors still has a lot of room for growth as pension funds and other long-term investors begin to include Bitcoin in their portfolios. On Thursday, the US House of Representatives voted to establish a regulatory framework for stablecoins pegged to the US dollar. It is expected that Trump will sign the bill on Friday. The House also passed two other key cryptocurrency bills, which will be submitted for review in the Senate. Adrian Fritz, Head of Research at digital asset investment company 21Shares, stated: "Institutional ownership of cryptocurrencies is still in its early stages." He added that retail investors still dominate the cryptocurrency market. Fritz estimated that less than 5% of Bitcoin assets held by long-term investors like pension funds are in ETFs, while hedge funds and wealth management companies hold 10% to 15%. However, he pointed out that wealth management institutions typically represent high-net-worth retail clients in purchasing these funds, so ETF holders are still mostly retail investors. Research from financial firm Vanda shows that there is a correlation between the significant purchase of cryptocurrency ETFs and related stocks by retail investors and price increases. Data shows that the price of Bitcoin surged at the end of 2024 after Trump (who once vowed to be the "cryptocurrency president") won the US election, with retail investors buying in large numbers at that time; and in the recent uptrend, retail investors have been actively entering the market. US lawmakers are expected to pass several bills this week to support cryptocurrency investors. The most influential of these, the "Genius Act," will establish rules for stablecoins (a rapidly growing area in the cryptocurrency market). The Republican-controlled House of Representatives passed cryptocurrency legislation on Thursday, paving the way for the first federal law on digital assets in the US. Major banks such as Bank of America Corp and Citigroup are also preparing to launch stablecoins. Another bill will provide regulatory certainty by clearly defining digital commodities and clarifying the responsibilities of regulatory agencies. This may attract institutional investors who have avoided this sector for a long time to enter the market. Simon Forster, Co-Head of Global Digital Assets at trading platform operator and data provider TP ICAP, predicts that by 2026, the number of institutions active in the cryptocurrency sector, including pension funds and other long-term holding companies, will increase. Fritz said, "But logically, they will be the group that enters the market last." Rise in Bitcoin Enterprise Holdings Analysts point out that although the limited transparency of the cryptocurrency market results in incomplete data, the role of Bitcoin-holding enterprises in driving demand is becoming increasingly prominent. Listed companies such as Strategy (MSTR.US) and GameStop Corp. Class A (GME.US), originally focused on software and video game retail businesses respectively, are now shifting their focus to replacing cash, gold, or ultra-short-term government bonds on their balance sheets with Bitcoin holdings for profit. Strategy's stock price has far outperformed Bitcoin over the past year and is seen by many investors as a channel to gain exposure to cryptocurrency in mainstream financial markets. Juan Leon, a research analyst at Bitwise Asset Management, noted that the purchasing power of these companies in Bitcoin indicates that their demand contribution has surpassed that of the main players in the stock and bond markets, such as pension funds and hedge funds. Strategy and GameStop Corp. Class A did not respond to requests for comment. Simon Peters, cryptocurrency analyst at investment platform eToro, said that since July last year, the holdings of global listed companies in Bitcoin have increased by 120%, with the current holdings accounting for more than 4% of the total Bitcoin supply (21 million). To replicate the stock price miracle of Strategy, many companies are raising funds to increase their Bitcoin holdings by issuing common shares, preferred shares, and convertible securities. Susannah Streeter, Director of Currency and Markets at Hargreaves Lansdown, said that the new round of related legislation in the US may lead more listed companies to allocate their cash reserves to cryptocurrency assets. However, analysts warn that if the price of Bitcoin falls below $90,000, half of the companies holding Bitcoin will face losses. Demand for cryptocurrency ETFs has also been steadily increasing in recent months. Data from cryptocurrency company Bitwise shows that global cryptocurrency ETF net inflows reached $4 billion last week, hitting a new high for the year. Regulatory filings show that large institutional investors publicly announced to invest in cryptocurrency ETFs over the past 18 months include the Wisconsin State Investment Board, Abu Dhabi sovereign wealth fund Mubadala, and hedge fund Millennium Management. Since the beginning of the year, Bitcoin has risen by about 25%, Ethereum has seen a slight increase of 2%, and Ripple has gained nearly 40%. Data from CoinMarketCap shows that the total market capitalization of cryptocurrencies has reached $3.8 trillion, an increase of 66% from before the US presidential election in November last year.