Under the surge, Bitcoin is only one step away from its all-time high. CoinMarketCap data shows that as of 6:00 on November 23, the price of Bitcoin was around $18,600, with a market value of $344.3 billion, and the total market value of the global digital currency market was about $542.3 billion.
This is undoubtedly a great encouragement to the encryption market. It is like giving everyone in the currency circle a shot of chicken blood, and the adrenaline soars.
Year-on-year global asset class data, since the beginning of 2020, the top three major asset class yields are Bitcoin, FAAMNG and COMEX gold. Among them, the return rate of Bitcoin exceeds 150%, while the second-ranked FAAMNG and the third-ranked COMEX gold are both lower than 50%.
On November 18, CCTV Financial Channel reported that since the fourth quarter, Bitcoin has started a new round of market. According to the analysis, compared with 2017, the current Bitcoin network construction, development environment and investment ecology are not what they used to be. If the driving force in 2017 came from retail investors in the market, the rise in the second half of this year was driven by institutional funds.
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Multiple benefits help Bitcoin fly
Since December 2017, Bitcoin has experienced three years of ups and downs, but it has never been able to touch the peak again. And now, no one seems to doubt that Bitcoin will reach new highs.
Emin Gun Sirer, founder of the avalanche protocol, tweeted that cryptocurrencies are witnessing a watershed, and for the first time are considered by mainstream investors as a durable and basically a new asset class.
On November 19, Wang Fuzhong, a professor at the Central University of Finance and Economics and a well-known economist, brought up the old story again. He said on Weibo that Buffett and other bigwigs are bearish on Bitcoin because they are successful people in the past era or leaders of ideas. But they don't understand and don't want to understand the new era of digital economy into which the world has entered.
"Behind the surge, there are three major factors that pushed up the price of Bitcoin." Sam Trabucco, a trader at the cryptocurrency company Alameda Research, believes that one is that more and more people are beginning to accept Bitcoin, and giant whales buy Bitcoin instead of selling it immediately When a group of giant whales will be formed; the second is a large number of people pouring into Bitcoin, because investors often deposit cryptocurrencies on exchanges for sale, this trend shows that there are fewer and fewer sellers in the market, and the supply of Bitcoin The third is that more and more banks, politicians, high-net-worth investors and billionaires have expressed their support for Bitcoin, which has boosted the price of Bitcoin.
On November 20, the encryption analysis company Chainalysis tweeted that most of the demand for Bitcoin in 2017 came from retail investors, and in 2020, institutions began to pour into Bitcoin, which was driven by hedging macroeconomic uncertainties.
An industry insider who did not want to be named also believed that, on the one hand, the change from retail-dominated to institutional-led shows that the market is developing in a healthier and more mature direction; Bear the brunt, since then, especially under the stimulus of monetary easing policies mainly in the United States, the Federal Reserve has frequently released liquidity to the market, causing global funds to "flee", and some safe-haven funds have flowed from funds, bonds, etc. to gold and Bitcoin. The rise in the price of Bitcoin and the detonation of the bull market provided the original impetus.
This shows that Bitcoin is gradually expanding its audience circle.
Recently, an annual survey released by Grayscale also illustrates this point. According to the findings, 83% of all Bitcoin investors started investing within the past 12 months. In addition, 63% of respondents said that the economic turmoil caused by the epidemic had a positive impact on their purchase of Bitcoin.
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Institutions rush to raise funds
Unlike the past, a large number of institutions have appeared in this round of bull market.
According to the Nuclear Finance APP, since this year, listed companies and investment institutions have accelerated the pace of deploying Bitcoin, and their influence has become increasingly prominent. According to the statistics of the Bitcoin Treasuries website, so far, 23 publicly listed companies and investment institutions around the world hold 842,351 bitcoins, with a current value of about 15.3 billion US dollars. Among them, there are asset management giant Grayscale (Grayscale), American software giant MicroStrategy, mobile payment giant Square and Galaxy Digital.
William, the chief researcher of OKExResearch, recently analyzed that, on the one hand, the total amount of Bitcoin is capped; on the other hand, the holding chips of Bitcoin are highly concentrated. Therefore, the actual number of bitcoins in circulation in the market is not very large. The huge amount of funds brought by traditional institutions and the market enthusiasm they have driven can easily drive up the market price of bitcoins.
In the eyes of people in the currency circle, Grayscale is undoubtedly the biggest Bitcoin "giant whale".
Analyst Tina believes that due to the continuous increase in holdings of the Bitcoin Trust Fund (GBTC) under Grayscale this year, subtle changes have taken place in the market, and it has even become a "barometer" of the currency circle. "As the world's largest digital currency asset manager, Grayscale simplifies a series of issues for users to purchase, store and keep Bitcoin, which has a great impact on the market trend of cryptocurrency." She said.
Statistics show that since Grayscale launched Bitcoin Trust in 2013, its asset management scale has continued to soar. Currently, Grayscale’s bitcoin holdings exceed 500,000 pieces, making it the “world’s largest bitcoin holding institution”.
On November 17, Grayscale’s total assets under management exceeded the $10 billion mark based on the price of Bitcoin on the day. According to QKL123 data, as of November 21, Grayscale’s bitcoin holdings were 526,764.
Miao Kai, the founder of Quantiex, said recently that Grayscale is a fund with wealth management strategies, and more often considers a medium-to-long-term stable and path-dependent asset allocation strategy, and better controls the margin of safety in accordance with the concept of value investment. From the perspective of long-term asset allocation, many investors in Grayscale pay more attention to the long-term compound investment return of the encrypted asset market, so they will choose short-term premium purchases.
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The industry is cautiously optimistic about the market outlook
"If it falls too much, it will rise, and if it rises too much, it will fall." For investors, the fear is increasing. CoinDesk also published that data on the Bitcoin options market shows that demand for put options has increased, indicating that investors have begun to prepare for a potential price drop in Bitcoin.
Forbes columnist Leeor Shimron published an article on November 19 that after entering 2021, investors should pay close attention to the following five indicators:
First, exchange balance/exchange net flow. The recent mass exodus of Bitcoin shows that Bitcoin has moved from short-term speculators to long-term holders.
Second, Bitcoin storage capacity. About 842,000 Bitcoins (4% of the total Bitcoin supply) currently exist on the balance sheets of businesses, and accumulating Bitcoins on the balance sheets of companies will further reduce the available supply.
Third, Bitcoin Google search volume. Although the price of Bitcoin rose to above $18,000, Google search volume was only 10% of the peak in 2017, which shows that the current market cycle is still in a very early stage, and only after reaching a new all-time high, more talents will start catching up.
Fourth, the perpetual swap financing rate. The current perpetual swap funding rate is around 0.005%, suggesting that long-short leveraged traders are fairly balanced.
Fifth, Bitcoin effective supply/dormant tokens. Bitcoin’s one-year effective supply has been on a downward trend since early 2018, with more than 60% of the available supply having not moved in the past year, and more than 40% of the supply having not moved in the past two years. Despite Bitcoin’s volatility, Bitcoin holders are refusing to sell, and the trend appears to be continuing.
According to a report by Flipside Crypto, the top 2% of Bitcoin addresses hold 95% of the total supply. BitInfoCharts data also shows that wallet balances with more than 100 bitcoins account for 61.5% of the total supply, but these wallet addresses only account for 0.04% of the total. This means that more than 16 million addresses hold less than 0.001 bitcoin.
"The increasing number of bitcoins held by giant whales is not a good thing for ordinary investors." Tina said.
However, Reuters published an article on November 19, saying that as Bitcoin soared to the top of its 2017 all-time high, supporters hope that there will be fewer crazy retail investors, which means that this crash is less likely. Unlike in 2017, the asset now has a fully functioning derivatives market and custody services from well-known financial institutions. The emergence of this infrastructure has made it easier for professional investors, from hedge funds to family offices, to seek out investments in cryptocurrencies.
Huobi Institute believes that the Bitcoin market is showing its huge investment potential. Judging from the fact that Grayscale has provided US institutional investors with a channel to connect capital in major financial markets, the inflow of capital into Bitcoin has continued to increase. Therefore, when bad news appears, the impact on the fundamentals can easily be covered by the new purchasing power, which also means that the cryptocurrency trading market has officially entered the era of incremental capital games.
