Bitcoin has seen an extreme rally over the past three months, climbing to $ 28,000.
Even after a slight correction, BTC is now still trading for $ 27,800.
Analysts believe there will be a tidal wave of capital that will invade the cryptocurrency space and send prices up even more.
Bitcoin could see a tidal wave of capital
Bitcoin has seen an extreme rally over the past three months, climbing to $ 28,000. Even after a slight correction, BTC is now trading for $ 26,500.
Many attribute this rally to institutional capital. There have been large funds, corporations, and other firms in this class that have bought cryptocurrencies in order to diversify their portfolios.
For example MicroStrategy, a business services company that bought Bitcoin worth $ 650 million. The company writes about the purchase:
„TYSONS CORNER, Va .- (BUSINESS WIRE) -Dec. Sep. 21, 2020 – MicroStrategy® Incorporated (Nasdaq: MSTR) (the „Company“), the largest independent publicly traded business intelligence company, announced today that it has acquired approximately 29,646 additional Bitcoins for approximately $ 650.0 million bought in cash at an average price of approximately $ 21,925 per bitcoin, including fees and expenses. “
According to a slide deck from Skybridge Capital shared by Bitcoin investor Hanson Birringer, the mutual fund is expecting a tidal wave of institutional capital to force its way into the Bitcoin space.
The slide deck shows that the company’s investors believe that Bitcoin will mature as an asset class. The Slide Deck specifically mentions the entry of pension funds, RIAs, hedge funds and other institutional investors.
Private customer demand is also skyrocketing
Small investor demand for Bitcoin is also skyrocketing.
Dan Morehead, CEO of Pantera Capital, recently found that the amount of Bitcoin being bought by PayPal users is skyrocketing, accounting for more BTC than is being mined every day:
“When @PayPal went live, the volume started to explode. The increase in itBit volume means PayPal is already buying more than 100% of the new supply of bitcoins within two months of launch … In the past seven months there have been two big shifts – one in demand, one in supply – both up. On the demand side, public companies like PayPal have entered the market. This shifts the demand curve significantly upwards. At the same time, the supply of newly issued BTC was halved in May – as part of the halving of Bitcoin emissions that takes place every four years. So there are fewer BTC available. We titled our last investor letter “Bitcoin scarcity”. The price behaves as if there was a shortage. „
This spike in demand for Bitcoin could lead to a shortage over time that, according to price analysis, will push the price above $ 100,000 and beyond.