Institutions flock to the potential risks of buying crypto assets

In the past few months, the general rise of crypto assets has not only been related to the successive policies introduced by the U.S. government that are beneficial to crypto assets and the crypto ecosystem, but also related to the swarm purchase of crypto assets by listed companies.

The former is a long-term factor that is good for this ecosystem, while the latter is a direct driver of the currency's price. I am always very cautious about the latter of these two, because it is not only not conducive to investors buying at low levels, but also easy to accumulate bubbles and accumulate risks in the short term.

Listed companies are buying crypto assets in droves, starting with Bitcoin. Led by micro-strategy, it quickly spread to other listed companies.

Then, this trend spread to Ethereum. First, Ethereum Lianchuang raised funds to buy Ethereum in the name of listed companies, and then Wall Street companies represented by Tom Lee joined the ranks of purchases, attracting new companies to join the "battle".

Just as the public company began buying Ethereum, the founder of Animoca Brands began to tweet about whether any company would imitate the previous two and target ApeCoin for a similar operation. Soon it was reported that Fat Penguin's token PENGU began to be acquired in large numbers.

The previous operations were only for tokens, but since last weekend, there have been funds targeting classic NFTs: over the weekend, a large amount of money spent $13 million to buy cryptopunks in batches, and another fund bought classic NFT artwork Squiggles in batches.

This week, Gamesquare publicly announced that it would set up treasury funds to purchase NFTs, with an initial funding of $10 million, expecting a return of 6%-10%.

I think these operations focus on whether they are long-term operations or short-term follow-ups. If it is a long-term operation, it will definitely have long-term benefits to the ecology and the development of assets, at least it can build a relatively solid price foundation for assets. But if they follow the trend in the short term, their swarming operations will increase the volatility of assets and bring greater chaos to the market at some point in the future.

Among these companies, MicroStrategy is a company that we are familiar with, a veteran who has gone through several Bitcoin cycles and has never left Bitcoin even at the bottom of the bear market. Michael Saylor also said that he has no children and that he plans to learn from Satoshi Nakamoto to ban his Bitcoin holdings forever in the future. This is a very solid and stable fundamental.

This operation of Ethereum Lianchuang is a new move, and how the future depends on how the company performs in the bear market, but at least from his current speech, I tend to believe that his move is to hold Ethereum strategically, from a long-term consideration, not a short-term operation.

Tom Lee's operation Judging from his current speech, I agree with some of his basic views, but I can also see that he has a clear style of Wall Street that I don't like.

Therefore, among the companies that buy Bitcoin and Ethereum, I only think that the operations of the above three companies are based on their own understanding of the ecosystem, and I think they are likely to follow the trend of other companies. They saw that this way of injecting crypto assets into shell companies could quickly drive up the stock prices of junk stocks in the short term, so they imitated it.

As for bulk purchases of NFTs, it is more complicated.

The disadvantage of NFTs is that they are far inferior to tokens in terms of liquidity; The advantage is that once the atmosphere rises, their prices are likely to increase much higher than the average token.

Therefore, the more suitable way for this asset is to remain calm, buy slowly, and hold it for a long time, and then you may make a huge profit. Now this high-profile publicity and high-profile action does not seem like an attitude to be held for a long time.

If we put aside the move to buy funds and look at the fundamentals of these assets alone, I think they have basically not changed fundamentally, or at least not now.

Bitcoin doesn't need fundamental changes, so it doesn't matter.

However, Ethereum needs fundamental changes, especially the explosion of application scenarios, to support the continuous rise in currency prices. But at present, whether it is stablecoins, RWAs, or AI + Crypto, although there may be some small applications, I have not seen any systematic and large-scale explosions at the entire ecological level, and I am mainly hyping expectations.

In NFT, cryptopunk and NFT artwork are similar to Bitcoin and do not require fundamental changes. But fat penguins and bored apes are different, they need fundamental changes and application scenarios to explode. At present, there is no explosion of their application scenarios.

So in general, this round of companies are flocking to buy crypto assets, whether it is tokens or NFTs, I think many operations are accumulating risks. In the short term, everyone is happy to see the currency price rise, but if the fundamentals and application scenarios do not explode, once the expected hype cannot be fulfilled and cannot be maintained one day in the future, then the collapse of the currency price may also become miserable as it is when the currency price rises vigorously.