Institutional entry pushes Bitcoin market capitalization to exceed the trillion-dollar mark

Bitcoin's market capitalization has surpassed the trillion-dollar mark, and this milestone is closely related to the recent large-scale institutional entry. Just 10 days after Tesla invested $1.5 billion to purchase Bitcoin, it achieved a paper profit of $800 million, exceeding the company's profits from car manufacturing over the past decade. Meanwhile, MicroStrategy raised another $1.05 billion through convertible bonds to continue buying Bitcoin. The company has accumulated over 70,000 Bitcoins since last year.

This enthusiasm reflects the recognition of institutions regarding Bitcoin's status as a "safe haven" in the era of global monetary easing. In addition to these actively getting on board institutions and wealthy individuals, traditional banking has also accelerated its embrace of cryptocurrency in the past two years, paving the way for its future wider acceptance.

The banking industry and cryptocurrency companies are accelerating their融合. According to statistics, there are currently 35 banks that are friendly to the cryptocurrency industry and have substantial business dealings with crypto-native enterprises, mainly distributed in the United States, Switzerland, and other European financial centers. Among them, 11 are located in the United States and 10 are in Switzerland. The median assets of these banks are $866 million, with 6 having total assets exceeding $2 billion.

The United States' leading position in the crypto banking industry is not only due to its long-term exploration of the crypto sector but also closely related to a series of recent executive orders issued by the Office of the Comptroller of the Currency (OCC). These policies have facilitated the rapid integration of crypto-native enterprises with traditional banks. For example, the payment charter launched by the OCC allows some crypto companies to upgrade to banks and may enable them to directly access the Federal Reserve payment system in the future.

At the same time, the OCC has opened the door for the direct custody of crypto assets by the U.S. banking industry and even allows banks to use public chains and crypto dollar stablecoins as infrastructure for payment, clearing, and settlement in the future. Against this backdrop, some large financial institutions have begun to venture into the crypto space. For example, JPMorgan has provided banking services to some U.S. licensed exchanges, and Bank of New York Mellon announced that it will launch a new digital asset custody division in 2021.

Switzerland is also at the forefront of crypto-friendly banking. The Swiss Financial Market Supervisory Authority (FINMA) opened applications for qualified crypto companies to obtain banking licenses as early as 2019 and allowed traditional banking to participate in this space. Several major Swiss banks have been approved to conduct crypto asset custody services.

In Asia, DBS Bank in Singapore has launched an integrated platform for the issuance, trading, and custody of digital assets, supporting exchange services between various cryptocurrencies and fiat currencies.

Publicly traded companies holding Bitcoin seems to be becoming a trend. According to statistics, there are currently 19 North American/European publicly traded companies that have allocated Bitcoin, and there are also some "quasi-ETF" funds managing a large amount of Bitcoin. The total amount of Bitcoin held by these institutions has reached 948,720 coins, accounting for 4.747% of the total Bitcoin supply.

It is worth noting that the asset management scale of some cryptocurrency funds saw significant growth in 2020. The market expects more competitors to emerge in 2021, and the Bitcoin ETF in the United States may also be approved and launched this year, potentially offering more competitive management fee rates.

Recently, two Bitcoin ETFs have begun trading in Canada, with the first ETF reaching a daily trading volume of $165 million, attracting widespread attention from the investment community. For listed institutions, these compliant securities market tools may become a more prudent choice for allocating Bitcoin.