Markets dominated by cognitive focus: Saylor's insights on the institutionalization of Bitcoin

Human cognition has fundamental biases. It tends to focus on short-term events and overlook long-term structural changes. This cognitive focus theory has become an essential perspective for understanding the current Bitcoin market. Strategy founder and chairman Michael Saylor sharply pointed out this psychological mechanism on the “What Bitcoin Did” podcast, analyzing the market participants’ short-term price fluctuations with emotional reactions and objectively examining the intrinsic progress of institutional adoption.

The year 2025 should be recorded not only as a year of Bitcoin price appreciation but also as the year when fundamental structural changes occurred in the financial system. Through Saylor’s perspective, we will examine what the market is overlooking and what changes can be expected moving forward.

2025 Breakthroughs: The Historic Context of Simultaneous Approval of Insurance, Accounting, and Regulation

Tracking the progress of Bitcoin adoption reveals not just price increases but also multifaceted advances on social and institutional layers.

Saylor emphasized the rapid increase in the number of companies holding Bitcoin on their balance sheets. From about 30–60 companies in 2024, it is expected to reach approximately 200 by the end of 2025, indicating that institutional adoption is no longer exceptional but becoming mainstream.

More importantly, this figure reflects layered institutional changes behind the scenes. First, the revival of the insurance market. Saylor himself experienced having his contract canceled by an insurance company when he purchased Bitcoin in 2020. The abnormal situation of continuously insuring personal assets for four years was finally resolved in 2025. This symbolizes a fundamental shift in how the market views Bitcoin assets.

Next is the introduction of Fair Value Accounting. Previously, Bitcoin-holding companies faced issues with unrealized capital gains taxes. However, in 2025, proactive government guidance effectively eliminated this obstacle. As a result, companies can now properly recognize gains from Bitcoin assets, making it a rational choice for their financial strategies.

Regulatory shifts have also been dramatic. U.S. financial authorities (CFTC and SEC) expressed support for Bitcoin and cryptocurrencies, and the Treasury Department issued positive guidelines regarding the inclusion of cryptocurrencies in bank balance sheets. The official recognition of Bitcoin as a “major digital commodity” by the government is highly significant.

Integration into the banking system is accelerating. At the beginning of the year, only $0.05 of lending was available against $1 billion worth of Bitcoin collateral, but by the end of the year, almost all major U.S. banks had begun offering loans collateralized by IBIT (iShares Bitcoin Trust), with about a quarter planning to lend directly against BTC. Early 2026 reports indicate that JPMorgan Chase and Morgan Stanley are negotiating Bitcoin trading and settlement.

The simultaneous occurrence of these changes is crucial. Market infrastructure has also improved significantly, with the Chicago Mercantile Exchange (CME) advancing Bitcoin derivatives markets, the introduction of tax-free physical exchange mechanisms between IBIT (spot Bitcoin ETF) and BTC, greatly enhancing trading efficiency and transparency.

Saylor described these elements as “all necessary for the commercialization, globalization, and institutionalization of assets,” emphasizing that 2025 is a turning point where “everything you wanted has been achieved.”

The Psychological Mechanism of Being Distracted by Short-Term Price Movements: Why the 95-Day High Is Forgotten

However, an intriguing contradiction arises. Despite rapid institutional adoption and ongoing structural changes, market participants remain focused on short-term price fluctuations. This is where the cognitive focus theory manifests most prominently in modern financial markets.

The numbers Saylor highlighted are symbolic. Despite Bitcoin reaching a new all-time high 95 days ago (early October 2025), its subsequent price decline over just a few months caused the previous historic surge to vanish from collective memory. The statement that “community memory is short, and the main topics are mostly recent events” accurately captures market psychology’s fragility.

This phenomenon can also be explained from economic and psychological perspectives. Humans have a “recency bias,” over-weighting recent experiences. In financial markets, this bias tends to be amplified because visible numbers like prices fluctuate daily, forcing investors to make immediate judgments.

Meanwhile, fundamental changes such as institutional adoption and regulatory approvals are harder to quantify and take time to manifest their effects. As a result, focus shifts to short-term movements, and essential structural changes are overlooked. Saylor explicitly states, “Trying to predict short-term prices is futile,” and emphasizes the importance of a long-term perspective, noting that “a 4-year moving average shows a quite bullish trend.”

An even more interesting point is the comparison with historical cases. Saylor mentioned, “Looking back over the entire 10,000-year history of ideological movements, people who are dedicated to something tend to spend about ten years on it,” warning that if Bitcoin’s commercialization is the goal, “we shouldn’t analyze or evaluate success on a weekly or monthly basis.”

Overcoming this cognitive focus is the most critical challenge for investors and market participants.

Reconsidering the Rationality of Bitcoin Companies: Positioning as a Universal Capital

Market evaluations of Bitcoin-adopting companies are complex. Many critics point out that the net asset value (NAV) of multiple companies is below 1, questioning the rationality of their Bitcoin purchase strategies. However, Saylor’s argument is fundamentally different.

His logic is clear: positioning Bitcoin holdings not as speculation but as a tool for productivity enhancement, comparing it to electricity infrastructure. The phrase “Electricity is a universal capital that can power all machinery, and Bitcoin is the universal capital of the digital age” fundamentally redefines conventional perceptions of Bitcoin.

From this perspective, the valuation of Bitcoin companies should be judged by entirely different criteria. For example, a company recording a $10 million annual loss but holding $100 million worth of Bitcoin and generating $30 million in capital gains would have a net profit of $20 million. In this case, the question “Why does the company buy Bitcoin?” should shift to “Why does the company continue to incur losses?” Saylor argues.

Considering there are approximately 400 million companies worldwide, even with only 200 Bitcoin-adopting companies, the market is still in a very early stage. Saylor counter-asks, “There are 400 million companies in the world, so why worry about 200 million?” pointing out that concerns about market saturation are weakly founded.

The logic that companies improve productivity through Bitcoin holdings is especially persuasive in the current environment of rising interest rates and inflationary pressures. Traditional financial assets (cash, government bonds) offer low expected returns, making Bitcoin’s relative value as an alternative asset more attractive.

Ambitions in the Digital Credit Market: Strategy’s $10 Trillion Vision

Saylor’s ultimate vision for Strategy is to build a “digital credit” market collateralized by Bitcoin. This is not about banking per se but aims to create a broader financial ecosystem.

According to Saylor, Strategy’s flagship product, “STRC (Strategy Deferred Digital Credit),” should ideally become a listed product with a 10% dividend yield and a book value ratio of 1–2 times. If it captures 10% of the U.S. Treasury market, the market size could reach $10 trillion.

This ambitious vision is supported by Strategy’s current performance. Saylor himself achieved profitability in 2025, largely thanks to the introduction of fair value accounting and regulatory support. From a situation where he had to support the company with personal assets for four years, the company has now become financially self-sustaining.

Regarding the potential of the digital credit market, Saylor stated that, in theory, collateralizing with Bitcoin could yield much larger margins than traditional financial products. The financial ecosystem based on Bitcoin capital—derivatives, exchanges, even insurance products—is currently virtually zero. This untapped market represents a genuine growth opportunity.

The reason for not entering banking also lies here. Banking is heavily regulated and highly competitive. Conversely, the digital credit market is a fundamentally new domain made possible by the emergence of Bitcoin as a new form of capital. Saylor emphasized, “If you have a true vision to transform the global monetary system, banking system, and credit markets, distraction must be avoided,” highlighting the importance of strategic focus.

Dollar Reserves and Creditworthiness: Strategic Choices Based on Capital Structure

Finally, it is notable that Strategy actively holds dollar reserves. While seemingly contradictory to a Bitcoin-centric corporate strategy, this is a highly calculated management decision.

Saylor explained that holding dollar reserves enhances creditworthiness for digital credit investors. For credit investors, volatility is an adversary. Equity investors may welcome Bitcoin’s volatility increase, but credit investors seek the most creditworthy assets. Therefore, to lead the digital credit market, companies must maximize their creditworthiness.

Dollar reserves serve as one of the mechanisms to achieve this, balancing long-term capital appreciation through Bitcoin holdings with short-term stability of credit products.

Beyond Cognitive Focus: The True Structural Change in the Market

The process of Bitcoin being institutionally accepted and integrated into the financial system is quietly progressing while market psychology remains dominated by short-term fluctuations. Saylor emphasized this contradiction at the end.

Many market participants ask, “Why did Bitcoin’s price fall?” but the more fundamental question is, “Why are companies buying Bitcoin, banks using it as collateral for loans, and governments approving it?”

In the turning point from 2025 to 2026, overcoming the cognitive focus theory will be the key divergence point for investment decisions and market understanding. Analyzing institutional changes objectively and focusing on the essence of long-term structural shifts are crucial to truly understanding the value of Bitcoin assets.