In a recent interview with Business Insider, Barhydt argued that institutions are changing their tune on cryptocurrencies, with many now viewing the as an opportunity rather than a risk.
“I talk to hedge funds, high net worth individuals, even commodity speculators,” he said. “They look at the volatility in the crypto markets and they see it as a huge opportunity. Once that happens, all hell will break loose. Once the floodgates are opened, they’re opened.”
Barhydt, who runs a Silicon-Valley crypto company, has plenty of experience with the financial giants, including a stint designing trading platforms for Goldman Sachs. In his view, major institutions will slowly make their way into the market through futures or by designing their own trading systems.
Eyeing the Next Breakout
While market participants have long predicted that institutions will be responsible for bitcoin’s future growth, many were disappointed by the relatively weak uptake in bitcoin futures last December. However, Barhydt believes that too is changing, particularly in Japan, where cryptocurrencies enjoy greater regulatory backing. In his view, even a small a small uptake by Western institutions will drive the market forward given the general lack of interest exhibited during the first quarter.
Predicting bitcoin’s next breakout is notoriously difficult, especially when we consider the length of previous downturns. Crypto experts like DataTrek Research co-foundeer Nick Colas believe that many investors erroneously believe that bitcoin’s fate is tied to the stock market. This is categorically false, as research by Ark Invest has clearly shown. In a 2017 whitepaper, the firm showed that bitcoin exhibits unique price independence and is not correlated with other assets or markets.
Colas essentially told CNBC the same thing last month, but did note an important exception in early February when cryptos seemed to move in tandem with stocks (in this case, lower). Stocks crashed at the beginning of February, right around the time cryptos completed a massive $550 billion correction. This suggests that a large portion of investors splurged on bitcoin after Thanksgiving before liquidating their positions when the times apparently got tough. (We’ve analyzed Google search trends and can confirm this is the case.)
Given that bitcoin is such a polar discussion – with investors, businesses and regulators – it’s difficult to predict what the next catalyst might be. Colas thinks the next up-move could be caused by increased business adoption, such as a big-name retailer accepting the digital currency as a form of payment. Others believe it will be tied to regulatory developments or the easing of restrictions in places like China. Though important, technical trading alone is unlikely to generate the next bull market, especially when we consider the market’s extreme price volatility.
BTC/USD Price Levels
Bitcoin exhibited much less price volatility on Wednesday, as the coin fluctuated between $7,851 and $8,007. At the time of writing, bitcoin was valued at $7,973 per unit, bringing its total market cap to $135.5 billion.
The market appears to have moved off oversold levels, although prices remain trapped in a downward trend.
At current values, bitcoin accounts for 45% of the entire crypto market.At $4.9 billion, BTC rading volumes accounted for roughly 35% of the total. Although no single exchange dominates BTC transactions, Bitfinex, OKEx and Binance saw the highest turnover on Wednesday.