Data shows that Silicon Valley and "smart investors" are the driving force behind the surge in Bitcoin

Bitcoin (BTC) continues to show strong gains after rising. Key data shows that the upward trend in recent months is likely driven by smart investors. This means that when the price of Bitcoin exceeded $15,000 this month, retail or mainstream investors were mostly on the sidelines.

Retail investor demand was at its peak in 2017, when Bitcoin hit an all-time high of $20,000. Google Trends data soared, mainstream media coverage increased significantly, and spot trading volumes in major markets exploded, especially in South Korea and Japan.

This time around, Google Trends shows relatively low search interest for the “Bitcoin” keyword, while on-chain data suggests smart investors are accumulating Bitcoin.

High Net Worth Investors Are Buying Bitcoin

In addition, on-chain analyst Willy Woo said that most of those who bought Bitcoin were high-net-worth investors.

Average Bitcoin transfer volume Source: Glassnode

When whales buy Bitcoin, they mostly do so through the over-the-counter (OTC) market. Over time, whales lead the buying spree, and the spot and derivatives markets follow the OTC market. Woo said:

“Who is driving this rally? Smart investors and high net worth individuals. You can see a big increase in the average transaction value among investors. OTC desks are seeing this as well. Bitcoin is still in a stealth bull run.”

The trend of whales leading retail investors is bullish as it shows that Bitcoin is still in the early stages of a bull run. A large amount of money from new retail and mainstream investors has yet to enter the cryptocurrency market.

Another Glassnode metric shows a similar trend. The number of Bitcoin addresses holding more than 100 BTC hit a seven-month high of 16,271.

Number of addresses holding more than 100 BTC Source: Glassnode

New capital inflow

The fact that whales have been buying Bitcoin over the past few months is bullish in itself. However, Woo stressed that the number of new whales has also increased.

If the number of addresses holding large amounts of Bitcoin increases, analysts believe this is because of an overall upsurge in the number of new whales.

An increasing number of high-net-worth individual investors are accumulating Bitcoin, coinciding with the recent rise in institutional BTC buying sprees.

After Square purchased $50 million worth of BTC, the number of high-net-worth investors in the Bitcoin market has clearly increased. Woo explained:

“Most importantly, we are seeing inflows not only from smart investors, but also from new smart investors. The orange line shows the rate at which new investors are pouring into the blockchain per hour. This is a very bullish scenario.”

Google Trends data shows relatively low retail investor interest in Bitcoin

Google Trends data shows a similar picture to the on-chain data points. Search volume for the keyword “Bitcoin” is currently less than 10% compared to its peak in 2017.

Google Bitcoin search volume Source: Google Trends

Still, while searches for Bitcoin remain low, states like Hawaii, California, Nevada and Washington are seeing particularly strong interest in the currency.

Bitcoin search interest by region in the United States Source: Google Trends

Interestingly, by 2020, California and Hawaii ranked third and fourth in per capita income, respectively.

Additionally, interest in Bitcoin is highest in San Jose/San Francisco, California, aka Silicon Valley. Of course, many high net worth investors and entrepreneurs come from Silicon Valley.