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While a near-term price correction is likely, analysts who spoke to CoinDesk said the latest bitcoin rally will be more sustainable in the long run than in 2017, the last time bitcoin’s price peaked. historical.
A difference from the last bull run? The current market has gained the support of a new wave of institutional investors based primarily in North America.
“You could look at the timing of the rally, which coincided with typical US market opening hours,” said John Todaro, director of institutional research at cryptocurrency analytics firm TradeBlock. He added those volumes to LMAX Digital, which mainly caters to institutional traders, are also higher.
Bitcoin’s price broke its previous all-time high on Monday, according to CoinDesk’s BPI, setting a new record at $ 19,850.11.
Learn more: Bitcoin trading fees on PayPal, Robinhood, Cash App and Coinbase: what to know
“During the little-traded Thanksgiving holiday, regulatory issues, outlined by Coinbase CEO Brian Armstrong in a series of tweets, caused the asset to correct, dropping to around $ 16,500, during a period when a large number of US institutional investors and traders were not actively trading, “Todaro said. “Today, Monday morning, you had a big return from institutional traders who offered the asset, buying the drop.”
To be sure, not all data for the world’s oldest cryptocurrency is bullish for the short term. According to data provider CryptoQuant, the influx of Bitcoin to the exchanges has outstripped the outflows from the Thanksgiving sale.
That on-chain metric could indicate a short-term bearish trend, sending bitcoin back to a level of around $ 16,000, said Ki Yong Ju, CEO of CryptoQuant. This is because it means that big bitcoin buyers, or whales, appear to be active in exchanges, adding more selling pressure.
However, the activity is another sign that this market is no longer what it was three years ago. After hitting its previous record in December 2017, the bitcoin price quickly dropped to $ 5,947.40 in just two months. At the time, the market largely attributed bitcoin’s rally to an increase in active retail investors.
Who is buying
Until recently, the term “institutional investors” in the cryptocurrency world meant an assortment of crypto companies, bitcoin miners, and early investors. The composition of market participants has gradually changed this year to include a new group considered institutional investors by the traditional financial world, according to Denis Vinokourov, head of research at leading digital asset broker Bequant.
Ongoing capital inflows into the Grayscale Bitcoin Trust and other issuers of exchange-traded products (ETPs), including 21Shares and CoinShares, are evidence that institutions in traditional financial markets are pouring money into bitcoin, Vinokourov said.
Read More: Investment Giant Alliance Bernstein Now Says Bitcoin Has a Role in Investors’ Wallets
Grayscale is owned by Digital Currency Group, which is also the parent company of CoinDesk.
“The long-only aspect has partly caused the surge in the rally and, in turn, has attracted momentum-driven investments that tend to push bullish rallies even higher,” Vinokourov said.
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