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Within 24 hours, the price of Bitcoin rose by more than 3,000 yuan, constantly breaking historical records.
On the evening of December 16, Bitcoin reached $20,000 in one fell swoop, and broke through the $21,000, $22,000, and $23,000 barriers in succession, breaking through historical highs, and then fell back to less than $23,000. According to the Bitcoin news information website Coindesk, the highest price of Bitcoin reached $23,770.85. As of press time, the price of Bitcoin was about $22,664, an increase of 14.89% in 24 hours. The transaction volume of Bitcoin in 24 hours was $51.74 billion, and the market value was $420.59 billion. Bitcoin price 24-hour trend Source: Bitcoin News Information Network Coindesk
According to the market statistics report of Hetongdi, the total liquidation of Bitcoin in the entire network was 571.9 billion US dollars in the past hour, and the liquidation of Bitcoin in the entire network in 24 hours was 903 million US dollars, with 41,741 people having their positions liquidated.
A Bitcoin investor told The Paper: "I don't feel anything special. I feel this day will come sooner or later. It's just a matter of time. And Bitcoin has a four-year cycle, so it's relatively more regular. Under normal circumstances, a new high should be broken at the end of this year or early next year."
He believes that $20,000 is an important psychological barrier, not only a goal but also an important psychological pressure point. "Once this point is broken, many investors' confidence in buying coins will increase. In addition, some short sellers in the past will close their positions or have their positions liquidated, so the price will be pushed up so much at once."
Bitcoin becomes the third most crowded transaction Since late October, the price of Bitcoin has entered a period of rapid increase from $11,000. After more than a month, on November 30, the price of Bitcoin exceeded the historical highest price of $19,665 on Coindesk, and has approached the $20,000 mark several times since then. On December 16, Bitcoin finally broke through $20,000, and even rose above $23,000 at one point, and now it has reached $22,000-23,000.
William, chief researcher at OKEx Research, believes that the main force of this bull market undoubtedly comes from the entry of institutional investors and high-net-worth individuals. This can be confirmed by the data of GBTC products under Grayscale Fund.
Grayscale Fund GBTC product third quarter investor ratio Source: Grayscale Fund third quarter financial report
William said that the GBTC fund is similar to an ETF fund, but it does not have a redemption mechanism, and there is also a 6-month lock-up period for secondary market purchases. GBTC's primary market subscription is only for qualified investors. According to its third-quarter financial report, 80% of its customers are institutional investors (mainly hedge funds), so it is a good indicator for observing the entry of institutional funds.
"According to the latest data, the total holdings of GBTC have reached nearly 570,000, an increase of 58.3% in less than half a year compared to the 360,000 holdings at the beginning of June. This shows that in the second half of this year, a large amount of institutional funds began to flow into the Bitcoin field." William said.
On December 10, Bloomberg reported that according to a survey conducted by Bank of America between December 4 and December 10, about 15% of fund managers said that Bitcoin is currently the third most crowded trade, second only to long technology stocks and shorting the US dollar. These fund managers manage $534 billion in assets.
On December 11, Wall Street reported that American life insurance company MassMutual had purchased $100 million in Bitcoin for its general insurance account through New York Digital Investment Group (NYDIG).
In addition, a recent report released by PwC shows that in 2020, more and more institutional investors entered the cryptocurrency market, including JPMorgan, Standard Chartered, Citi Group, Deutsche Bank and DBS Bank Group, and many institutions even began to regularly underwrite the assets.
Root cause: Changes in the global macroeconomy
William believes that the fundamental reason for the entry of institutional funds lies in the changes in the global macroeconomic situation this year.
"On the one hand, affected by the epidemic, the global economic recovery will slow down in the coming year; on the other hand, the central bank's extraordinary monetary easing has pushed up inflation expectations in the financial market. In an economic environment of high inflation, low growth and negative interest rates, in order to avoid loss of nominal principal and the need to pursue higher returns, investors' demand for hoarding cash naturally evolved into demand for gold and its substitute - Bitcoin," he said.
Daisy, a senior analyst at Huobi Research Institute, said that the global epidemic has shown signs of recovery recently, the vaccine supply cannot meet the demand, the US stimulus bill may be introduced again, the US dollar continues to depreciate, and the US dollar index continues to fall close to the low point in 2018. The market demand for assets that can effectively counter the expectation of US dollar inflation has further increased, so the medium- and long-term demand for Bitcoin has not weakened, but has strengthened.
In sharp contrast to the ever-rising price of Bitcoin, on December 17, the US dollar index fell below the 90 mark, the first time since April 20, 2018.
From a technical analysis perspective, William pointed out that around December 12, the upper pipeline line of the symmetrical triangle was crossed by the Bitcoin price, indicating that the Bitcoin price will rise sharply in the future and the trading volume will also increase. Therefore, around December 16, Bitcoin broke through the $20,000 mark, reaching a record high. Bitcoin price trend forms a symmetrical triangle. Source: OKEx Research
"At present, the market's expectations for low global economic growth and high inflation have not changed significantly. Therefore, Bitcoin will continue to rise for some time to come and its price will continue to hit new highs," he said.
Investors need to remain rational. It is worth noting that William emphasized that after the price of Bitcoin broke through the $20,000 mark, a large number of investors began to pour into the cryptocurrency market, causing some cryptocurrency exchanges to freeze or crash. This shows that the main investors in the market may undergo structural changes, from institutional investors to small and medium-sized investors. The market's excitement and enthusiasm are further amplified, which may lead to large fluctuations in Bitcoin prices. It is hoped that market investors will remain rational and not increase leverage at will.
The above-mentioned Bitcoin investor said, "Generally speaking, if the market enters a period of rapid growth, then you still need to exit to hedge risks." (The Paper)
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