Why bitcoin and cryptocurrencies are continuing to tick higher
Anri Arslanyan, global head of cryptoassets at PwC, said Bitcoin’s record rally in recent weeks was driven in part by the entry of larger institutional investors..
The digital currency surpassed the $ 30,000 mark for the first time on Saturday and is up more than 300% in 2020, according to Reuters. Bitcoin traded at $ 32,668.93 on afternoon Monday in Asia, according to CoinDesk.
The cryptocurrency has been around for a little over ten years, but its popularity among major institutional investors only manifested itself last year. Crypto bulls say that, like gold, bitcoin is seen as a hedge against inflation.
«If you look at this bitcoin rally that we have seen over the past couple of weeks and months, there are actually two important factors driving it. One of them is the constant emergence of institutional players», – said Anri Arslanyan (Henri Arslanian) on CNBC Monday «Street Signs Asia».
The resurgence in Bitcoin (BTC) prices last year was driven in part by famous Wall Street billionaires publicly backing the cryptocurrency. Analysts said their support has instilled confidence in skeptical mainstream investors. Investors like Paul tudor jones (Paul Tudor Jones) and Stanley Druckenmiller (Stanley Druckenmiller), invested in bitcoin and pointed to its potential as an inflation hedge.
Big financial companies like PayPal and Fidelity also invested in cryptocurrency, while Square and MicroStrategy used their own balances to buy bitcoins..
Arslanyan said he expects this trend to continue in the coming months, noting that there are now various tools that allow institutional players to access bitcoins.. «But there are also many regulated players. A couple of years ago, this was not the case», – said analyst at PwC Global Crypto.
According to Arslanyan, the second factor contributing to the current rally in bitcoin is retail investors and their fear of missing out. He said that many more people today have accounts on crypto exchanges than before, as buying cryptocurrency is now easier than it used to be..
«Thanks to these two important elements, there is a great momentum in this space. There is a lot of optimism in the cryptocurrency markets too», – he said.
Bitcoin’s recent successes are reminiscent of its insane rally to $ 20,000 in 2017, followed by a sharp pullback in 2018 that wiped out billions of dollars in the market capitalization of major cryptocurrencies. But crypto fans say the current rally is different as it is driven by institutional buying rather than retail speculation..
For his part, Arslanyan said that one big difference between this rally and the 2017 rally is the clarity of the rules, which were few then. Today, he said, most regulators around the world have people working on cryptocurrency domestically. According to him, many large financial centers have «a fairly good regulatory framework in the cryptocurrency markets, and this comforts not only institutional investors but also retail investors who come to the market».
Although Arslanyan declined to name a target price for Bitcoin for this year, he said the current momentum remains optimistic.. «I keep track of not only the price of bitcoins, but also the number of new institutional players that I think are having a huge impact on the markets.», – he added.