The price of Bitcoin climbed to $28,000 last week, but a key element of the market is still missing.
Where are the retail investors in the market?
The data shows that since 2017, the key drivers of the cryptocurrency market have not yet entered notoriety, but the turbulent and repeatedly collapsed cryptocurrency market has fallen into a vicious field.
Quoting Google Trends data, it was found that the retail search for "Bitcoin" remained at the level before 2017, when Bitcoin soared from under $1,200 to over $19,000. The asset fell more than 80% to below $3,500 in early 2019, and the market rebounded again.
Institutions frequently enter the market, buying Bitcoin in general
So, if it is not retail, who will buy it? According to the skewed data, it is an institution. According to data from Institutional Fund Manager Grayscale, the assets under management of various popular exchange-traded funds this year reached $16 billion.
The company's bitcoin product GBTC accounted for $13 billion in that transaction alone. The product is an over-the-counter transaction, and the trading market is very active, with a daily transaction volume of more than 12 million US dollars. Each GBTC "share" holds a small amount of spot Bitcoin, and Grayscale charges a small premium on top of this value for convenience.
This product, provided by Grayscale Investments, is one of the only publicly traded Bitcoin products for U.S. citizens, and has gained popularity in 2020 in the widespread positive sentiment of institutional funds, technology companies and family offices to Bitcoin.
Some fund managers, such as Harris Kupperman of Praetorian Capital, said that Grayscale's GBTC is also a major part of Bitcoin's price trend in 2020. He said in a blog earlier this year that GBTC has created an endless cycle of buying stocks by institutions. Grayscale purchases spot bitcoins to pay for these stocks (pushing up prices), and market participants continue to buy more as prices Multiple bitcoins.
At the same time, amidst the bleak economic outlook and concerns about inflation, Wall Street companies are becoming more and more interested in Bitcoin and scrambling to capitalize on its proceeds. These include Guggenheim Partners, which recently stated that it may invest 10% of its $5.3 billion macro opportunity fund in Bitcoin trusts.
Some others are already popular. Software developer MicroStrategy has obtained $1 billion in Bitcoin through three transactions this year, and fund manager Paul Tudor Jones said in May that he holds assets worth more than $70 million through BTC futures.