Bitcoin looks set to hit many new record highs in 2021, but when will retail investors join the party?
There are many investors who feel validated in the crypto market now that the price of Bitcoin has set a new all-time high of $34,778.
The last time Crypto Code traded near this level was during the 2017 bull run, when it peaked at approximately $19,783. Even the mainstream media noticed, including the New York Times, which noted that the current cycle had „a very different feel to the last time.
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Many in the crypto community would agree. Therefore, it is essential to analyze in depth the factors that are driving the current rally.
The „average user“ no longer runs the program
Bitcoin reaches a new all-time high with a very different feeling than last time.
In 2017, it was widely believed that Bitcoin’s bullish run had been driven by retail investors who were making speculative bets on a nascent market in BTC and other smaller-cap cryptosystems from the initial madness of the currency supply.
At the time, it was reported that there were millions of retail investors in South Korea, Japan and China who became a force in the market. At the time, it was the „average user“ that was driving the more than 1,300% gain in Bitcoin that year, as IG Group’s head of market strategy, Chris Weston, pointed out in the Wall Street Journal.
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Fast forward to 2020, and the investor landscape has changed dramatically. Institutional investors, who largely stayed out of the first bullish race, have been the face of the rally this time.
These investors are largely expected to take long-term holding positions with no intention of selling in the short term. They’re also flocking to the Bitcoin futures markets, where open interest on the Chicago Mercantile Exchange recently topped $1 billion, and are strengthening their balance sheets with BTC rather than leaving it in cash.
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While it is not unusual for institutional investors to be ahead of the curve, it is worth repeating that they were not the first out of the gate in crypto space. In fact, many of the leaders of the American companies that are now entering Bitcoin for the first time are the same people who discarded Bitcoin back then.
For example, in October, PayPal announced that it would support transactions in cryptosystems for all 26 million merchants on its platform. Users can also buy, maintain or sell crypto currencies on the PayPal platform, including Bitcoin, Ether (ETH), Litecoin (LTC) and Bitcoin Cash (BCH).
The irony is that Bill Harris, PayPal’s former CEO, warned in 2018 that Bitcoin was worthless and headed for zero, even labeling it a scam. PayPal only rivals Jack Dorsey’s Square for the pace at which large companies are buying up Bitcoin.
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Wall Street companies previously shied away from Bitcoin because of its volatility, considering it a risky asset at best and „rat poison squared“ at worst, according to Warren Buffett of Berkshire Hathaway. While Buffett hasn’t yet approached crypto currencies, other big investors have.
Billionaire traders, from Paul Tudor Jones to Stanley Druckenmiller, have become optimistic about Bitcoin, and both have been promoting the leading cryptomone currency ahead of physical gold.
In 2017, JPMorgan CEO Jamie Dimon threatened to fire employees who were dealing with Bitcoin, but now the company is releasing optimistic analyst reports on the digital asset. Larry Fink, CEO of BlackRock, the world’s largest asset manager, also appears to be enthusiastic about Bitcoin, suggesting that it’s not out of the realm of possibility that Bitcoin will „evolve into a global marketplace. He stated:
„Bitcoin has caught the attention and imagination of many people. It hasn’t been tested yet, it’s a fairly small market in relation to other markets.