- Bitcoin has broken its previous all-time high of USD 19,798 at Binance.
- The reasons for the rally paint a bullish picture for the coming months.
After nearly three years, Bitcoin yesterday managed to break its all-time high of nearly $20,000 USD on several major stock exchanges. As analyst Josh Rager tweeted, BTC broke its all-time high on the Kraken ($19,660), Bitstamp ($19,666) and Binance ($19,798) exchanges, while Coinbase, Bitfinex, Gemini and BitMEX, with the highest price of $20,093, are still waiting for it.
While the Bitcoin price has risen by over 170% since the beginning of 2020, the actual bull run did not begin until August, according to many experts. At that time, a number of institutional investors, led by Michael Saylor’s MicroStrategy, made their investment and bullish opinions about Bitcoin public.
While Bitcoin rose from approximately $7,150 to $11,850 between January 1 and August 10, an increase of approximately 65%, the share price rose again by 65% in only three months since August 11, the date of MicroStrategy’s initial investment. During this period, Bitcoin’s market capitalization increased from $216 billion to $356 billion. Average daily trading volume doubled from $23 billion to $48 billion, reflecting the tremendous increase in interest in Bitcoin.
The reasons for Bitcoin’s rally to an all-time high
Without doubt, the enormously increased institutional interest in Bitcoin is the biggest driver behind the current rally. After MicroStrategy increased its investment to $425 million on September 8, Jack Dorsey came forward on October 8 and stated that Square had used 1% of the company’s assets, approximately $50 million, to buy Bitcoin.
But probably even more important than both companies is Grayscale Investments, the world’s largest crypto asset manager, which attracts institutional investors. The company has grown rapidly in recent months and currently manages $12.2 billion in cryptocurrencies, with the Grayscale Bitcoin Trust alone accounting for over $10.2 billion. According to its Q3 quarterly report, Grayscale’s GBTC purchased 77% of all newly mined Bitcoins.
This number could increase massively in the future. Just last Friday, the Guggenheim Funds Trust announced that it will invest over $500 million from the Macro Opportunities Fund in the Grayscale Bitcoin Trust. With more than $295 billion in assets under management, Guggenheim Partners will be the largest company to date to buy Bitcoin.
Even one of the largest investment companies in the world, BlackRock, has recently publicly confirmed the potential of Bitcoin. Rick Rieder, CIO of BlackRock, said about a week ago that Bitcoin could replace gold:
Do I think it’s a durable mechanism, do I think it will take the place of gold to a large extent? Yeah, I do, because it’s so much more functional than passing a bar of gold around.
But Rieder is just one example in the long list of new BTC supporters. With prominent hedge fund managers such as Paul Tudor Jones II, Stanley Druckenmiller and Bill Pulte, many influential people have praised Bitcoin’s potential as a hedge against central banks’ global inflationary policies.
PayPal, OKEx and bullish sentiment
But not only institutional investors, but also PayPal and its retail customers exert strong buying pressure on the Bitcoin price. The company announced on October 21 that it will let customers buy, sell and hold Bitcoin. As reported by CNF, after the leeks of the crypto trade in the U.S., PayPal in turn also purchased 70% of all newly generated Bitcoins to meet customer demand. As soon as Europe and other regions receive the service next year, this figure will also explode further.
In addition, the Bitcoin market has also matured recently. News such as the investigation of OKEx by Chinese authorities and the resulting suspension of withdrawals have not shaken the market. The same applied to announcements that the USA could introduce stricter regulations for self-administered wallets.
Last but not least, the overwhelming majority of all analysts are currently showing strong bullish sentiment. By the bank analysts assume at present that it is only a question of the time, until Bitcoin will break also the all-time high with BitMEX of over 20.000 USD durably. In this sense Josh Rager stated a few hours ago via Twitter:
Ready to see some Bitcoin price discovery for the first time three years. Want to see $19,300s hold and $BTC price grind up from here. Slow and steady uptrend with occasional pullbacks in-between.