# Institutional Bitcoin Investment: A Strategic Asset for Inflation and Economic Uncertainty

Bitcoin’s decentralized nature and resistance to inflation are making it an invaluable tool for institutions looking to hedge against economic uncertainty and preserve long-term value. Institutional purchasing of Bitcoin signals confidence in innovation and growth, while selling reflects various corporate strategies such as profit realization and cash flow management.

The expanding acceptance of Bitcoin as an investment asset in Asia and its adoption by governments in El Salvador and the United States demonstrates its pivotal role in shaping global economic strategies.

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## Institutional Investors and Bitcoin

Bitcoin, distinguished by its unique characteristics of decentralization and inflation resistance, has emerged as a noteworthy investment asset, offering new possibilities for asset management strategies within institutions. A prime example of leveraging Bitcoin’s advantages is MicroStrategy. This company has effectively utilized Bitcoin to manage inflation risks and strengthen its financial stance. Their success story has paved the way for global corporations and financial institutions to explore new investment avenues.

However, Bitcoin investment is not universally suitable for all institutions. While purchasing news often garners attention, some companies have been quietly selling. This phenomenon has been recurrent. This report delves into the institutional adoption of Bitcoin as an investment asset, analyzing the decision-making factors that lead to buying or selling under similar market conditions. Additionally, we examine the rising prominence of Bitcoin in corporate investment portfolios from an Asian market perspective and response strategies.

## Bitcoin as an Investment Asset

Traditionally, institutional investors have employed bonds, gold, and foreign currencies to hedge risks and preserve asset value amid economic uncertainties. Bitcoin has emerged as a strategic investment asset underlining its distinctive features compared to traditional assets. Unlike bonds or gold, Bitcoin exhibits strong inflation resistance and higher profitability. Its total issuance is capped at 21 million, ensuring scarcity and enhancing its appeal as a long-term value preservation tool.

### Bitcoin’s Role as an Inflation Hedge

According to the 2024 study “Is Bitcoin an Inflation Hedge?” by Rodriguez and Colombo, significant findings emerged from analyzing 10 years of U.S. Consumer Price Index (CPI) and Personal Consumption Expenditures (PCE) data. They found a notable rise in Bitcoin returns following inflationary pressures, suggesting Bitcoin’s potential as an inflation hedge. However, this effect varied with different inflation indicators. It was especially pronounced in CPI fluctuations and in Bitcoin’s early market stages before significant institutional participation. These insights indicate that Bitcoin’s inflation hedge effect may vary with market conditions and diminish as mainstream adoption grows.

### Bitcoin’s Profitability and Practical Value

In 2024, Bitcoin recorded an astounding 147% return compared to gold’s 28.39% and S&P 500’s 26.85%. Beyond returns, Bitcoin offers practical value as an investment asset. Unlike bonds, which have restricted trading hours and complex transaction procedures making them less responsive to interest rate fluctuations or market shocks, Bitcoin provides 24/7 global liquidity and real-time trading. Its high liquidity, enabling swift monetization regardless of location, sets it apart from traditional financial assets, allowing institutions to manage assets efficiently and respond swiftly to market conditions.

Bitcoin’s combination of high profitability and practical value positions it as an increasingly vital component of institutional portfolios.

### Bitcoin as a Tool in the Attention Economy

With over 3,300 companies listed on NASDAQ alone, obtaining investor attention through sound fundamentals alone has become challenging. Corporations are allocating substantial marketing budgets to increase market visibility. In this environment, Bitcoin creates peripheral promotional benefits. Institutional announcements of Bitcoin acquisitions for portfolio diversification have naturally garnered significant media exposure.

This media visibility has brought several advantages to companies: enhancing brand value, attracting retail investor interest, and reinforcing the perception of being innovative and forward-looking. Therefore, Bitcoin not only offers potential asset value appreciation but also organic enhancement of corporate value.

## Analysis of Institutional Bitcoin Investment Strategies: Buy or Sell?

As Bitcoin firmly establishes itself as an institutional investment asset, unique trading patterns have been observed. Institutions publicly announce Bitcoin purchases, sending strong market signals, highlighting corporate innovation, and boosting market credibility. Conversely, selling has been limited, typically occurring as part of capital realization for business reinvestment.

### Analysis of Institutional Bitcoin Purchases: MicroStrategy

MicroStrategy has elucidated the potential of Bitcoin as an institutional investment asset by actively acquiring it. Holding 446,400 BTC, MicroStrategy has drawn significant market attention by achieving dual objectives of inflation protection and financial fortification.

CEO Michael Saylor transformed from a skeptic to an ardent advocate, emphasizing avoiding investments vulnerable to inflation, low-yield bonds, and overvalued tech stocks. He endorsed share buybacks and Bitcoin as optimal uses for corporate surplus funds while preparing for an era of unlimited quantitative easing.

Despite initial skepticism, MicroStrategy’s Bitcoin investment strategy has garnered widespread approval from other corporations. Recognized for both inflation defense and as “digital gold,” this innovative approach has redefined corporate capital management paradigms. Their success has significantly influenced the Asian market. Boyaa Interactive transitioned from Ethereum to Bitcoin, and MetaPlanet undertook aggressive Bitcoin acquisitions in 2024. These moves indicate Bitcoin’s acknowledged utility in volatility management and long-term value preservation in Asia.

### Analysis of Institutional Bitcoin Sales: Tesla

Tesla provides a notable example of significant Bitcoin selling. In 2022, amid economic uncertainty, Tesla sold 75% of its Bitcoin holdings to secure liquidity. In October 2024, Tesla transferred $760 million worth of Bitcoin to an unidentified wallet, hinting at potential further sales.

Tesla strategically utilized Bitcoin investments for business expansion, including new plant constructions in Austin, Texas, and Berlin. CFO Zachary Kirkhorn described Bitcoin as a useful financial tool for ensuring liquidity and profitability during extensive capital projects.

Conversely, Meitu achieved profit realization by selling when Bitcoin reached $100,000. Unlike Tesla’s vague rationale, Meitu transparently cited financial stability enhancement due to their underperforming core business. Such transparency mitigated market uncertainty from institutional sales.

Institutional Bitcoin sales stem from financial goals and operational needs. As seen in Tesla’s and Meitu’s cases, sales are often for profit realization during market booms or capital procurement for primary business reinvestment. The main reasons for institutional Bitcoin selling include 1) capitalizing on market peaks for operational improvements or ventures, and 2) enhancing cash flow management.

These sales behaviors help discern whether future institutional Bitcoin sales align with long-term financial planning or short-term liquidity enhancement. Tesla’s investment in new plants increased annual production capacity to two million vehicles and positively impacted stock prices. Conversely, diverting realized profits to shareholder returns rather than core business improvement might miss the long-term value prospects of holding Bitcoin.

### Analysis of Asian Institutional Bitcoin Buying and Selling

MetaPlanet stands at the forefront of Asian companies adopting Bitcoin, earning the nickname “Asia’s MicroStrategy.” By acquiring 1,018 BTC in 2024, MetaPlanet demonstrated its firm commitment to long-term Bitcoin investment.

MetaPlanet’s case exemplifies a successful turnaround from a “zombie company,” characterized by barely sustainable operations and limited growth capital. Despite ample cash reserves, MetaPlanet failed to attract market attention. Emulating MicroStrategy’s strategy, it achieved a significant transformation.

MetaPlanet plans to extend its Bitcoin investment into new business domains, exploring various financial instruments such as loans, stocks, convertible bonds, and revenue generation through put options. This proactive investment model goes beyond mere asset holding.

However, this strategy is not universally applicable to all zombie companies. Success hinges on preemptive market positioning, suggesting that indiscriminate imitation by trailing companies could increase risks. A judicious approach, considering cash reserves, market conditions, and risk management capabilities, is essential.

## Conclusion and Key Implications

Bitcoin’s evolution as an investment asset is causing substantial shifts in institutional finance. Its decentralization, inflation resistance, and high liquidity make it an attractive choice for asset diversification and long-term value preservation.

Governments, too, are exploring Bitcoin’s potential. El Salvador’s adoption of Bitcoin as legal tender highlights its role in economic growth and financial inclusion. Recently, Trump declared intentions to adopt Bitcoin as a “permanent national asset for the benefit of all Americans.” Such governmental movements underscore Bitcoin’s rising significance to policymakers focused on financial system modernization.

Corporations have benefited from both Bitcoin buying and selling in market upswings. Purchases underscore faith in Bitcoin’s growth potential, while sales enable profit realization and reinvestment in core businesses. However, in downturns, these activities warrant close scrutiny. Purchases may trigger concerns about exposing business capital to speculative investments, while sales could indicate liquidity sourcing for operational costs.

Decision-makers must recognize Bitcoin’s potential as an investment asset but integrate it cautiously into corporate strategies. Companies should weigh the financial advantages of holding Bitcoin, such as liquidity and inflation resistance, against operational risks and market volatility. Whether for long-term reserves or short-term liquidity, effective Bitcoin utilization requires precisely aligning with business goals and market conditions.

This content is an excerpt from TigerResearch’s report “To Buy or Not to Buy: Corporate Bitcoin Investment Strategies,” available on the TigerResearch website.