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#1 28-12-2020 08:24:46

johnedward
Admin & Trader
From: Paris - France
Registered: 21-12-2009
Posts: 3068
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Bitcoin soars past $20K, crypto frenzy continues

Bitcoin soars past $20K, crypto frenzy continues


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Bitcoin achieved an excellent performance in the last quarter of 2020. Its value doubled in eight weeks, reaching $24,000.

An avalanche of good news drove the rally. First of all, PayPal announced the introduction of crypto payments on its online payment platform. Second, Bitcoin became increasingly known among institutional portfolios. For example, Square invested $49 million in Bitcoin, while MicroStrategy, another public company, revealed that it had invested more than $99 million in the leading cryptocurrency.

Naturally, hoarding has driven people's imaginations, and the next thing you know, Bitcoin has become the darling of online investments. The interesting thing is that as the price went up, more news came in, revealing even greater interest from the institutional community.

Institutional investors are piling up in the cryptocurrency world

PayPal and MicroStrategy seem to have launched a race in the institutional investment space for exposure to Bitcoins. Considered by many as a substitute for gold in a professional portfolio, Bitcoin benefits from one of the main characteristics of gold: its rarity.

MassMutual Life Insurance, Guggenheim and a "whale" backed by Alan Howard are the new players in the crypto space. Only this time, we are talking about billions, not millions, invested.

In addition, Singapore's largest bank, DBS, recently announced the launch of a digital exchange of crypto-currencies open to institutional investors as well. It allows retail and institutional clients to trade crypto-currencies against four fiat currencies - three Asian currencies (the Hong Kong dollar, Japanese yen and Singapore dollar) and the world's reserve currency, the US dollar.

What we are witnessing here looks very different from the rally in the cryptocurrency three years ago. In 2017, Bitcoin had reached nearly $20,000 thanks to "panic purchases" made in the retail community. This time, it seems that institutional investors have quietly built up positions, accumulating in secret and then revealing their stakes.

Due to the scarcity mentioned above, the price rose to $24,000 and remained offered at every drop. Moreover, considering the fact that most individual traders are holders (i.e. they bought the corners with the intention of holding them for a long time in case the bet was generously paid off), the scarcity becomes even more acute.

Extreme volatility has long been a problem for Bitcoin and other crypto-currencies. Only this year other assets have experienced similar levels of volatility - think of the stock market crash in March or Tesla's increased volatility.

All in all, Bitcoin's rally is on a solid footing. The race for bulls may well continue for some time to come.

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