Bitcoin in the starting blocks: Why this crypto bull run is completely different
Is there any doubt that we are in the early stages of a crypto bull run? Pick a metric, any metric, and chances are it will indicate that.
For example, the total value of capital locked up in DeFi has never been higher. Similarly, total crypto market capitalisation is hovering in and around its all-time high of $1.1 trillion.
Despite numerous crypto newbies popping up on social media – the reality is: retail Bitcoin Code investors are not here yet. At least not to the extent they were three years ago, during the last bull run.
A look at Google Trends confirms this. Searches for the keyword „cryptocurrencies“ are expected to reach 56 by the end of January 2021. While this is a bullish sign, it is still a far cry from the levels seen in January 2018.
Back then, the ICO craze and the FOMO of retail investors, who were often looking to make a quick buck, drove the market higher.
But this time, it’s institutional investors who are the driving force behind this bull run.
Earlier this year, PwC’s Global Crypto Leader Henri Arslanian said:
„If you look at this bitcoin rally that we’ve seen over the last few weeks and months, there are really two big elements driving it. One is the continued entry of institutional players. But there are also a lot of regulated players. That wasn’t the case a few years ago.“
Why the institutional interest?
The pandemic outbreak turned everything we thought we knew upside down.
Disrupted supply lines, mass unemployment and fiscal stimulus exposed the fragility of the global economic order.
As difficult and stressful as it is to live through, the only silver lining is the flight into anti-inflationary assets, especially Bitcoin. The has benefited from the rising demand for it as more and more people buy Bitcoin.
The realisation that cash is a drain has put institutional investors on the map.
MicroStrategy got the ball rolling as the first listed company to hold Bitcoin as part of its treasury strategy. Once one institution „joined the party“, others followed.
This is expected to gain momentum into 2021.
Apart from the price rise aspect, it is unclear how this will affect the cryptocurrency industry.
However, the fact that well-known names like Square, PayPal and even JP Morgan are on board adds a touch of legitimacy to it all. And that is one thing that was missing during the last bull run.