In the next 5 years, 90% of institutional investors expect to invest more in crypto assets such as Bitcoin

80% of institutional investors believe that the recent quantitative easing policies adopted by the central bank and the government caused by the coronavirus pandemic may lead to an increase in inflation. In the next five years, most institutions will turn to Bitcoin to hedge against currency devaluation.

According to Evertas’ recent research report on institutional investment in cryptocurrencies, from now to 2025, 90% of institutional investors expect to invest more in crypto assets such as Bitcoin, while 80% of investors expect retail investors The same can be done. Square recently announced that it had once again purchased $50 million worth of Bitcoin from its balance sheet, which confirmed the findings of Evertas. The first organization to lead this trend was MicroStrategy, which invested $500 million in Bitcoin. Max Keizer, the founder of Heisenberg Cap, commented on this institutional FOMO (fear of missing out) sentiment in a recent tweet.

Encrypted assets apply game theory to these noteworthy developments, and the motivations of institutions and their impact on Bitcoin prices and volatility become clearer. The key to game theory is that one player’s profit depends on the strategy implemented by another player.

After MicroStrategy’s Michael Saylor decided to buy Bitcoin and became popular and made headlines, Square took action. The peers reacted to MicroStrategy’s move. However, once more than 60% of the institutions in the industry invest in Bitcoin, it may reach the Nash equilibrium (also known as the non-cooperative game equilibrium, which is an important term in game theory. · Nash named).

Basically, the Nash balance is a stage where institutions “do not regret”, but as the circulation of US dollars in Bitcoin increases, the market value may increase, and the trading volume of derivatives and spot exchanges will increase proportionally. However, the other side of Nash’s balance is the situation of neither losing nor winning. Currently, Bitcoin is an asymmetric bet due to its volatility.

Bitcoin’s volatility is the main driver of its profitability. Volatility is what causes Bitcoin to rank first among assets that provide a high return on investment. However, when the Nash equilibrium is reached, in other words, when a large number of institutions buy Bitcoin and invest in it, the volatility may become more seasonal. Currently, Bitcoin’s volatility depends on the various stages of the market cycle. However, the Nash balance may cause investors to bet each other in a highly competitive market, which may create and destroy value for individual investors. Therefore, it is important for retail traders to pay attention to these trends and signals to find out the trend of Bitcoin prices.

Back in 2013, Michael Saylor tweeted that the days of Bitcoin were over.

However, Bitcoin is now the main asset of MicroStrategy’s vault. Seven years later, his position has taken a 180-degree turn. In these 7 years, the ROI of Bitcoin is as high as 9000%. At this stage, institutional investors like MicroStrategy are entering, and smart money entering Bitcoin may increase the inflow of much-needed funds from spot exchanges. To understand its impact on the price of Bitcoin, look at the number and price of Bitcoin over the past five years.

Although transaction volume is not completely related to price, according to Bitcoinity data, there has been a trend in the past two years, and transaction volume has remained above US$9.5 billion. The corresponding price is in the range of 7290-10500. In order for the price of Bitcoin to exceed the 10,000 level, the transaction volume needs to be increased by 2 to 3 times. This can be achieved through institutional investment from more companies such as MicroStrategy and Square.

Reaching the Nash balance may require an inflow of more than $30 billion from various agencies, and this will be achieved in the next five years. Until then, the game will continue, and the domino effect will continue. The overall trader sentiment based on CoinMarketCap’s on-chain indicators is neutral, but every time smart money flows into Bitcoin, it is overwhelmed by bullish sentiment.