While a near-term price correction of Bitcoin is likely, some analysts have said that the latest bullish cryptocurrency will be sustainable longer than in 2017, the last time the bitcoin price hit an all-time high.
A new wave of institutional investors
A difference from the last bull run? The current market has gained the support of a new wave of institutional investors based primarily in North America. "You could look at the times of the rally, which coincided with typical US market opening hours," said John Todaro, director of institutional research at cryptocurrency analysis firm TradeBlock.
He added that the volumes of LMAX Digital, which is aimed primarily at institutional traders, are also higher. Bitcoin price broke its previous all-time high on Monday, setting a new record at $ 19.830 - find out how buy Bitcoins in our guide.
“During the Thanksgiving holiday, concerns about the new regulatory terms outlined by Coinbase CEO Brian Armstrong in a series of tweets caused the asset to correct, dropping to around $ 16.500,” Todaro said.
"Today, Monday morning, there was a great return of institutional traders who bought bitcoin at a lower price." To be sure, not all data for the world's oldest cryptocurrency is bullish in the short term.
According to data provider CryptoQuant, the influx of Bitcoin to the exchanges has outpaced the decline due to the Thanksgiving sale. That on-chain metric could indicate a short-term bearish trend, bringing bitcoin (BTC) back to a level of around $ 16.000, said Ki Yong Ju, CEO of CryptoQuant.
This means that big bitcoin buyers, or whales, appear to be active on exchanges, increasing the selling pressure. However, there are signs that this market is no longer what it was three years ago. After hitting its previous record in December 2017, the bitcoin price quickly dropped to $ 5.947,40 in just two months. At the time, the market attributed bitcoin's bull run to an increase in active retail investors.
Who is buying
Until recently, the term "institutional investors" in the cryptocurrency world meant a group of crypto companies, bitcoin miners, and early adopters. The composition of market participants has gradually changed over the course of this year to include a new type of figure considered institutional investors by the traditional financial world, according to Denis Vinokourov, head of research at digital asset broker Bequant.
Ongoing capital inflows into the Grayscale Bitcoin Trust and other exchange-traded products (ETPs), including 21Shares and CoinShares, are evidence that institutions in traditional financial markets are pouring money into bitcoin, Vinokourov said.
“The long-only aspect has partly caused the surge in the rally and, in turn, has attracted momentum-driven investments that tend to push bullish rallies even higher,” Vinokourov said.
