CoinShares: Institutional Money Inflow Could Be Causing Bitcoin’s Rise
Currently, Bitcoin is not so exposed to speculation, contrary to its bullish rally of 2017. The correlation between the Bitcoin and altcoin markets is not so strong anymore.
The flow of institutional money into the cryptocurrency market could be one of the reasons for Bitcoin’s bullish market in 2019, says CoinShares. Analysts from the firm suggest that the launch of the Facebook, Bakkt and Fidelity projects legitimized the Bitcoin market, in the eyes of investors.
In the report, whose title is “H1 Crypto Report 2019,” it was noted that the price of Bitcoin had an “aggressive recovery” after the second quarter of 2019. The analysts underscore that, although the rally reminded of the historical price increase of 2017, both events have occurred due to different factors and causes.
Bitcoin received widespread attention from the media in 2017, after its bullish trend began to be recorded. Twitter posts and Google searches related to Bitcoin reached record numbers. Even alternative currencies to Bitcoin, such as Ether, Dash or Litecoin, showed an increase in their prices for that year.
It is worth noting that these four factors, which accompanied the 2017 Bitcoin bullish rally, are not present today. CoinShares analysts believe that the 2017 Bitcoin market was so speculative that all the news and the overexposure of social networks encouraged minority investors.
However, today they believe that the prices of Bitcoin have increased due to the flow of institutional money into the cryptocurrency industry. Experts suggest that the announcement of Fidelity to inaugurate a Bitcoin escrow service, or the launch of the Bakkt platform for future contracts and Bitcoin escrow, are events that have legitimated the cryptocurrency in the face of traditional investors.
A Change for the Rise
The Facebook cryptocurrency project, Libra, has also played a relevant role in favor of the cryptocurrency market. The fact that companies such as Visa, MasterCard or Uber now want to venture into projects like the Libra network can counteract years of negative press, says the report.
CoinShares analysts are not the first to have noticed the differences between the Bitcoin bullish market in 2017 and that in 2019. Will McDonough, director of blockchain development at Diginex Americas, said that current investors know more about cryptocurrencies and have valued the risks of investing in them. Matti Greenspan, senior analyst at eToro, considered jointly with McDonough, that today Bitcoin has more sustainable prices.
A study conducted by the Pacific Northwest National Laboratory (PNNL) also indicated that the interest in the Bitcoin market in 2017 was highly influenced by social networks. For this reason, the researchers determined that the news and posts on Twitter and Reddit could have led to the manipulation of the price of Bitcoin by then.
Additionally to all the reasons described above, in the last few months the correlation of Bitcoin with other altcoins has decreased considerably. The most popular cryptocurrency in the ecosystem now has a market with behaviors similar to those of gold, suggesting that an increasingly growing number of investors are using Bitcoin as a safeguard of value.
By Willmen Blanco