原文标题：This Bitcoin halving will be different — the institutions are here
原文作者： WEE KIAN LIM
原文来源：Blockworks
编译：比推BitpushNews an
In January 2024, shortly after Bitcoin's 15th "birthday", the digital asset world ushered in a long-awaited turning point – the U.S. Securities and Exchange Commission approved 11 spot Bitcoin ETFs.
For many industry players, this marks the transformation of digital assets from a niche curiosity in "cypherpunks" to an alternative asset class and has garnered a high level of attention from some of the top asset managers.
Now, the community is gearing up for another important milestone in the coming weeks – the fourth Bitcoin halving. Cryptocurrency natives know that the first three Bitcoin halvings largely followed a clear pattern of increased market activity, leading to a price rally and then entering a corrective phase.
While we can draw on past experience to predict how the market might react, I think the upcoming halving will be unlike any before it, and there's a key reason for this: professional investors have entered the crypto market.
At the same time as Bitcoin's halving, private wealth, family offices, and large traditional financial institutions began to strategically incorporate digital assets into their portfolios and products for the first time. This marks a shift in the way the industry operates, and it also means that the after-effects of this halving will be different from all the others.
From mysterious niche areas to asset classes managed by professionals
Every Bitcoin halving over the past 15 years has marked a milestone in the evolution of digital assets.
At the time of the first halving in 2012, digital assets were still a mysterious niche area, largely driven by the technological curiosity and liberal spirit of early adopters.
During the second halving in 2016, mainstream awareness had grown so much that CME Group, the world's leading derivatives market at the time, launched the Bitcoin Price Index later that year, setting the stage for then-fledgling institutional interest.
By the time of the third halving in 2020, the entire market landscape had changed dramatically, with digital assets winning the hearts and wallets of retail investors. The widespread spread of user-friendly investment platforms has boosted their accessibility, which in turn has driven a surge in acceptance of digital assets in the mainstream investment market.
However, as of 2020, most professional investors are still on the fence about cryptocurrencies as they remain skeptical about the asset class's role in a credible portfolio and its legal status. Investors who are ready to venture into the cryptocurrency market quickly realize that there is a lack of trustworthy exchanges, platforms, and custodians in the market that cannot meet the regulatory, operational, and security standards expected of professional traders. In the digital asset space, particularly in Asia, there is still an unmet demand for experienced institutional-grade counterparties. This was a key driver for the launch of our DBS Digital Exchange in December 2020. Recognizing that there is a gap in the market, other financial institutions have also launched digital asset platforms.
Everything changed in 2022, when, with the collapse of billion-dollar crypto exchanges and hedge funds, the entire industry suffered a huge crisis of confidence. It is important to note that the trigger for these events was not the failure of blockchain technology, but the poor risk management and corporate governance. Investors are aware that in addition to the need to manage highly volatile asset classes, relying on unregulated platforms will expose their digital asset portfolios to significant operational and technological risks.
To mitigate these risks, investors are beginning to self-custody their portfolios or move digital assets to trusted platforms – often those that follow the rules of traditional financial institution regulation, particularly in areas such as risk management, asset segregation, financial stability, and anti-money laundering. Regulators in major financial centers such as Singapore have also begun to impose requirements on digital asset platforms to meet these standards.
Recognizing these structural changes, digital asset platforms either adapt accordingly, move to less demanding jurisdictions, or exit the market altogether.
But that didn't sound the death knell for the industry, and the worst crisis for digital assets instead led to its shift to a professionally managed asset class.
Investors who are no longer on the fence
So what can we expect from the fourth Bitcoin halving?
Given that each halving marks a decrease in the supply of newly mined Bitcoin, we are likely to see a period of strong buying demand in anticipation of a Bitcoin rally, as it did in previous halves. This has already started – the Bitcoin price recently broke its previous all-time highs.
However, what makes this half-life different is that professional investors who had previously taken a wait-and-see approach have overcome their past skepticism and entered a more specialized market. We may also see market participation from asset managers and funds such as spot ETFs.
This trend has already begun. From 2020 to 2021, large entities such as institutions, funds, custodians, and over-the-counter exchanges increased the supply of Bitcoin by 13.4%, while the number of large entities holding Bitcoin increased by more than 27%. Fast forward to 2023: the surge in institutional-focused Bitcoin products (and the expectation of actual ETF approval) ahead of ETF approval is arguably one of the reasons for the rally that began at the end of last year. According to Coinshares' research, $2.25 billion flowed into digital asset investment products in 2023, the third-most such inflow since 2018.
Now is ripe for professional investors to expand their share of participation in the market. Unlike previous cases where the half-life Bitcoin price corrected sharply within months after hitting new all-time highs, the post-half-life selling pressure may be eased by this new investor makeup.
As these new investors bring the reach of their capital, they will also bring with them a heightened vigilance about the risks posed by unlicensed and untested platforms. So, this time, professional investors will place more emphasis on working with a trading platform with the right qualifications, allowing them to focus on managing their portfolios without having to worry too much about managing operational and technical risks.
These qualifications include infrastructure such as bankruptcy isolation, regular independent audits, robust cybersecurity, tested risk management processes, and adequate liquidity protection.
In addition, as digital assets are increasingly adopted into alternative portfolios, platforms that seamlessly integrate with other financial services – such as the ability to manage digital assets alongside traditional assets, or the ability to access tokenized investment opportunities – will also have a competitive advantage over pure digital asset platforms.
The platform ecosystem in the market will inevitably evolve in this direction, as professional investors will be more comfortable working with such trading platforms. In summary, the fourth Bitcoin halving promises to be a turning point in the transformation of the digital asset industry – building a mature, trustworthy, and professionally operated ecosystem.