Some think it’s too early to call it, but the Bitcoin (BTC) bull run is seemingly back on the table. Over the past two months, the cryptocurrency market has seen the bitcoin price double, rallying from $4,200 to $8,600, the price as of the time of writing this, in a 2017-esque fashion.
With this jaw-dropping move, which caught bearish traders with their pants down, some have questioned who’s behind the move, and what will drive the price forward from here. Evidence is quickly mounting that crypto’s benefactors are institutional players, who have become enticed to invest as the digital asset ecosystem has matured at a breakneck pace.
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Institutions Rushing To Scoop Up Bitcoin
According to Twitter commentator The Rhythm Trader, the massive uptick in interest in cryptocurrency markets has evidently materialized in Grayscale’s products. The firm’s Bitcoin Trust, which is one of the first publicly tradable BTC products on the market, accumulated 11,236 coins in April alone. With there being 54,000 BTC being mined each month, Grayscale, barring that its inflows haven’t slowed, is buying up 21% of the new Bitcoin supply.
With the recent inflows, Grayscale now has just over $1.9 billion worth of assets under its management, with over 1% of all Bitcoin that will ever be mined in its possession to boot.
Grayscale Bitcoin Trust accumulated 11,236 bitcoin in April alone.
Currently 54,000 bitcoin are mined per month.
Right now, they are buying up 21% of the new supply of bitcoin.
In a year, the halvening will double that number to 42% of the supply.
Institutions are FOMOing.
— Rhythm (@Rhythmtrader) May 29, 2019
And the data suggests that the money behind these purchases are, believe it or not, coming from institutions. In a recent thread, Larry Cermak, the director of research, at The Block, pointed out that Grayscale’s products are inherently biased towards institutional clients.
The analyst wrote, “Only qualified accredited investors can invest directly in GBTC with a minimum investment of $50,000.” For those unaware, accredited investors are those with a net worth (minus your primary home) of over $1 million (a small percentage of the population, even in the U.S.) and/or those that have earned a taxable income of over $200,000 per year. Very few investors fit these requirements.
What’s more, in Grayscale’s latest report, it was revealed that 73% of the $42.7 million it pulled in during Q1 of 2019 came from institutional players, half of which were an unnamed group of hedge funds.
All this lends to the assumption that institutions are trying to get their hands on Bitcoin ASAP, as such investors are being influenced by the push and pull of the “Fear of Missing Out“.
Related Reading: Bitcoin Daily CBOE Futures Chart Has “Gaps Galore,” When Will They Fill?
This isn’t the only data point contributing to the theory that institutions are looking to get involved in Bitcoin after a year of inactivity. As reported by NewsBTC previously, on May 13th, the CME processed 33,677 Bitcoin futures contracts worth of trades, amounting to 168,385 paper BTC. This is absolutely staggering, especially considering that the last record, set in February, was a relatively mere 91,690 BTC.
What Effect Will Institutions Have On Crypto?
With institutions returning, what effect will this investor subset have on the cryptocurrency market at large? Simply put, these players are expected to cause a wave of buying pressure that’s bigger than ever before, even bigger than what we see now.
As Andy Cheung, OkEX’s head of operations, suggested in a recent email, “$20,000 is a conservative prediction” for Bitcoin to reach in 2019, as institutional backers should boost this space to new heights.
Naeem Aslam of Think Markets agreed. In a comment obtained by MarketWatch, the analyst remarked that Bitcoin’s has strong upside momentum due to strong technicals and the fact that institutions are rushing back into cryptocurrency, boding well for the current rally.
And most recently, Sonny Singh of BitPay, explained that the recent rally is “just the tip of the iceberg”, as the cryptocurrency space is being backed by some of the biggest names in technology and finance, like Fidelity Investments and Facebook.
Catch BitPay's Chief Commercial Officer Sonny Singh on @BloombergTV talking about cryptocurrency's growing mainstream use, from JP Morgan to Facebook: https://t.co/F2KlCkNGGC #BlockchainPayments
— BitPay (@BitPay) May 29, 2019
After institutions, retail is expected to follow, leading to another influx of buying pressure. But, this isn’t happening yet. Per previous reports from NewsBTC, Bitcoin may have rallied by 100% in the past two months, but Google’s search engine has yet to register a notable uptick in search interest for “Bitcoin” and similar terms. In fact, Google search interest for Bitcoin is only at 10% of its all-time high.
This, for those unaware, suggests that those that already know about the space, presumably institutional players and others in the “smart money” category, are siphoning more money into this space, now newbies and common folk.
With time and the launch of key facets of cryptocurrency infrastructure though, retail will soon follow in the footsteps of their institutional brethren.
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