At the time of this writing, Bitcoin has hit the $60,000 mark, breaking the former all-time high of $58,620.77. This milestone comes at a time where corporations and financial institutions are warming up to Bitcoin and investors buying more of it which has led to Bitcoin actually dwindling in amount.
Global cryptocurrency exchange Kraken noted that the numbers of Bitcoin on exchanges have dwindled down 13% indicating that the market is buying a lot of Bitcoin.
President Joe Biden has signed the $1.9 trillion COVID relief bill, and with it, a $1,400 stimulus check with some people already receiving the money.
This sudden injection of money into the pockets of Americans would most likely lead to inflation which in turn sees people go buy more Bitcoin.
Simon Peters, an analyst on the online trading platform eToro, said “when central banks announce plans to pump money into economies, many investors in the crypto community take this as a major bitcoin buy signal.”
Analysts from blockchain data firm Glassnode suggest that many investors are holding onto their bitcoins with some taking it a step further and outright removing Bitcoin from online exchanges. Glassnode said in a recent newsletter that the amount of Bitcoin in circulation fell, more than 800 thousand Bitcoin has been taken away from the total supply.
Strong hands came in to buy this latest dip.
Red in this chart showing coins moving to HODLers with very little history of selling. pic.twitter.com/SPd8jb9d28
— Willy Woo (@woonomic) March 11, 2021
The analysis states that this has never happened before for this long and “could lead to a massive supply squeeze…”
Deep Pocket Investors
Data in the Glassnode analysis suggests that long-term holders appear to be not as concerned over the next drop as previous ones. This could be due to the fact that institutional interest in Bitcoin is increasing as seen with the massive investments done by Tesla and Square, but retail investors are dropping off.
📉 Institutional interest continues to increase, but retail demand appears to be dropping.
"This is due to the high price levels, as the number of new daily addresses being created continues plummeting," said our co-founder Greg Waisman https://t.co/E0MJYzhl49
— Mercuryo (@Mercuryo_io) March 11, 2021
Greg Wasimn, the co-founder of payment network Mercuryo, says “market participants do not seem to be interested in bitcoin at the current price level as the number of new daily addresses being created continues plummeting… “
Demand to Increase
New institutional investors coming in and buying more bitcoin could lead to a situation where institutional demand could far outweigh the current supply according to Kraken. And this demand could very well last for months.
76% of Goldman's institutional clients surveyed agreed that the price of #bitcoin by the end of the year could be $100,000. "We see a huge amount of demand institutionally." #btc #cryptocurrency https://t.co/KKO6FttK7R
— Bitcoin News (@BTCTN) March 7, 2021
As for the value of Bitcoin, Mike Novogratz, founder of financial services firm Galaxy Digital, told Markets Insider that he expects Bitcoin to hit $100,000 by the end of 2021.
Although, there’s an asterisk attached to that number. Bitcoin could grow that big as long as the market stays risk-friendly and more companies and industries start to accept Bitcoin. But the road to 100K is not a straight path.
The United States is crawling out of the dark pandemic year. 2021 is expected to be a year of economic recovery as vaccinations are happening at a blinding speed with cities around the country easing restrictions; there’s hope the pandemic will die in the coming months.
Bitcoin flourished in a year of economic turmoil as investors sought assets outside of national economics. When things calm down, will Bitcoin continue its upward trajectory or plummet? What do you think?