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A study on market and investor sentiment analysis shows that the recent rise in Bitcoin prices is driven by institutional investors.
Cryptocurrency research company Tie believes that Bitcoin transactions have hit a record high, and the main driving force behind this trend comes from institutional investors. At the same time, statistics from Google search trends show that retail investors are not paying too much attention to Bitcoin transactions, and the factors leading this market rise come from institutions.
Market driven more by institutional trading
Cryptocurrency market research company Tie recently released its latest analysis of the Bitcoin market on Twitter. The company believes that institutional interest and trading are the main drivers of the current Bitcoin market. The agency said on Twitter that "Bitcoin trading is currently at an all-time high."
It is learned that Tie has introduced an evaluation indicator concept called "NVTweet ratio (NVTweet ratio = market value divided by 1 million divided by the 30-day average Twitter volume)", as shown in the figure below. According to the analysis of the current indicator data by Tie researchers, the current NVTweet ratio shows an upward trend, which indicates that Bitcoin is more driven by institutional transactions because the market value is growing faster than the exposure on social media.
Many market investors believe that institutional investors have been increasingly interested in the ecosystem of the cryptocurrency market for a long time. Last Friday (June 20), Nomura Securities, one of Japan's top investment banks, released its much-anticipated crypto custody service "Komainu" to its institutional clients. It is understood that the service was launched in conjunction with two partners, Coinshares and Ledger.
In addition, according to a recent report released by the research team of Fidelity Digital Assets, at least 36% of the world's 800 institutional investors have invested in crypto assets.
Galaxy Digital founder: Now is the era of Bitcoin
Galaxy Digital founder Mike Novogratz recently discussed the issue of "institutional investors' interest in Bitcoin" with fintech reporter Paddy Baker. He said that if institutional investors do not enter the market now, his company will "pick up" all the Bitcoin.
Mike Novogratz explained, "What's special about Bitcoin is how it will be adopted. Obviously Bitcoin should not be used as a medium of exchange, so the next step is to be adopted as a store of value, and digital gold is the role that Bitcoin will play."
Not only that, Mike Novogratz also said: Now is the era of Bitcoin.
Retail investors show little interest in cryptocurrencies
The current relative lack of interest in digital assets among retail investors may be related to the global economic downturn caused by the COVID-19 epidemic. It is noted that according to the latest Google Trends data, the search volume for keywords involving "Bitcoin" has dropped significantly compared to the same period in May.
In the week of May 10 to May 16, the search index score of the keyword "buy bitcoin" once reached the highest level of 100 points, and the keyword "bitcoin" scored 80 points. In contrast, in the same period of June, the score of "buy bitcoin" fell to 66 points, and the search score of "bitcoin" was even lower, only 44 points.
It is worth mentioning that many economists and macro traders are extremely optimistic about the future performance of Bitcoin.
Finsmes crypto market analysts have set a target price for Bitcoin at five times the previous highest price. The reason for such a positive prediction is mainly because analysts believe that Bitcoin is no longer an asset that only exists in the digital world. Since CME has listed Bitcoin futures products, it can be traded like traditional commodities, which also "stimulates" institutional investors to be more and more interested in Bitcoin and the broader cryptocurrency industry.
In fact, the new coronavirus epidemic has had a huge impact on almost all economies in the world in the past six months. The economic turmoil has also shown how fragile the traditional financial system is. This factor has also "forced" some traditional financial channels to begin to increase their interest in digital assets such as Bitcoin.
Dan Held, director of business development at Kraken, also recently talked about "how to make wise investments in the current macroeconomic situation". He believes that investing in Bitcoin is extremely reasonable, and Bitcoin has proven to be a trustworthy "gold substitute". Especially in the current environment affected by the new coronavirus epidemic, for investors with portfolio allocations including Bitcoin, the risk may be relatively small. Dan Held quoted the modern investment portfolio theory and explained:
“People look at Bitcoin as a portfolio protection because it’s not as closely correlated to existing financial markets, especially stocks. Bitcoin might move differently, and that’s what modern portfolio theory is about, that assets move differently from each other.”
It is important to note that traditional investors must keep their risk tolerance in mind when choosing their investment portfolios, so adding Bitcoin to their investment portfolios is critical for most investors in today's market. Especially in the current period of economic uncertainty, the advantages of Bitcoin will become more obvious, which will attract more institutional investors. |
