Institutional and retail investors are entering the market, and Bitcoin has strong upward momentum

According to Bitpush data, Bitcoin, the cryptocurrency with the largest market value, broke through $41,000 on Friday to set a new record high. Industry insiders believe that institutions and retail investors have jointly driven the rise of the crypto market over the past period of time.

Michael Sonnenshein, the new CEO of digital asset management company Grayscale Investments, said in an interview with Bloomberg that more institutional investors are now interested in cryptocurrencies.

He mentioned, “We have begun to see participation from not just the hedge fund sector, we have seen participation from the hedge fund sector before, but now the interest is coming from other institutions, including pension funds and endowment funds. Their allocation scale to crypto assets is also growing rapidly.”

Frank Spiteri of digital asset management company CoinShares also told Yahoo Finance, “We are seeing a continued surge in demand, driven in large part by sustained and unprecedented institutional interest, a force that shows no signs of abating as we enter 2021.”

If the main force driving the rise in Bitcoin prices in the second half of 2020 came from institutions, then retail investors also began to show their strength after entering 2021.

Cryptocurrency exchanges such as Coinbase and Binance, and online trading platforms such as Revolut and eToro, have seen a recent surge in activity as new investors rush in.

Michael Bucella, partner at cryptocurrency investment firm BlockTower Capital, told CNBC, “There is no doubt that market data shows that retail participation has increased. This is reflected in the recent rise in altcoins and the increase in trading volume on crypto exchanges.”

Google Trends data shows that online searches for Bitcoin surged earlier this month, though the number of searches for the cryptocurrency remains well below levels seen during the last bull run in late 2017.

Meanwhile, online investment platforms have seen a surge in registrations and trading volume. On January 4, EToro had 61% more Bitcoin holders and 49% more Ethereum holders than the same period last year.

“There will be volatility in the market, which is natural after such gains, but the long-term trend is clear,” Simon Peters, market analyst at eToro, told CNBC. “Cryptocurrencies are entering the mainstream and more and more investors are increasing their investments.”

Revolut said it had added 300,000 new cryptocurrency customers in the past 30 days as the price of Bitcoin surged to new highs. Bitcoin was the most popular digital currency on the platform in the past two weeks, followed by XRP and Ethereum.

Daniel Lacalle, chief economist at Tressis Gestion, told CNBC that Bitcoin and other cryptocurrencies are becoming increasingly popular among retail investors in emerging markets such as Argentina, Brazil and Turkey. He said, "There is growing demand for cryptocurrencies, especially Bitcoin, among savers in emerging economies, even as the dollar has weakened in 2020, and the exchange rates of these countries' local currencies against the dollar have plummeted. I also think that small investors are rushing to get in because they see the trend."

Charles Hayter, CEO of CryptoCompare, told CNBC that looking ahead, there are "two clear catalysts" for the crypto market: the approval of a Bitcoin exchange-traded fund (ETF) and the successful IPO of Coinbase.

Image source: pixabay

AuthorLiang Che

This article comes from Bitpush.News. Reprinting must indicate the source.