If you have been following Bitcoin (BTC) for any length of time, you are well aware that major increases in price are not at all uncommon. Despite the fact that it frequently grows by leaps and bounds in relatively short periods of time, it is always surprising to see the incredible heights that it can reach. In this most recent bull run, BTC has grown all the way to $61,683, before undergoing a modest retracement.
Of course, along with Bitcoin’s incredible growth also comes some heart wrenching drops in price. Most followers of cryptocurrency remember that after the 2017 bull run BTC went from its then all time high around $20,000 down to around $4000 by March of 2020.
For the past several weeks, Bitcoin has been moving up in down in the mid to upper $50k range. While crypto investors may be used to major growth and major dips, it is often the extended periods of time when Bitcoin remains in one somewhat tight price range that can cause the most anxiety. These periods of relative stability often lead to a major pump (or dump) in the price.
So, while we all wait with baited breath to see whether Bitcoin breaks up past $60,000, or dips back into the $40k range, let’s look at some current market factors that may help investors to decide whether now is a good time to stack more sats.
What is Driving This Bull Run?
There is no doubt that Bitcoin is experiencing a bull run. Many people predicted this bull run based on the halvening event that took place last year. So far, each time the number of Bitcoin mined per block was cut in half, it experienced a huge bull run the following year.
It would be easy to dismiss this bull run as just part of the normal cycle of Bitcoin. The fact is, however, that this run is unlike any in the past.
During the 2017 bull run the constant narrative among crypto enthusiasts was that institutional investors will enter the market at any time and help to drive the price even further up. During that run, however, the institutional investors never entered the market, and the bull run turned into a bear market for several years.
While this current bull run began only with retail investors, we are already seeing institutional level investors enter the market at incredible speed. These major investors are buying millions of dollars’ worth of Bitcoin at a time, and showing no signs of slowing down. Some examples of this include:
- MicroStrategy – MicroStrategy is a tech firm that has purchased 91,579 Bitcoin to hold as an investment. This is in addition to the 17,732 Bitcoin that the CEO, Michael Saylor, personally holds.
- Tesla – Earlier this year Tesla announced that they had purchased $1.5 Billion worth of Bitcoin for their balance sheet.
- Greyscale – Greyscale is an investment firm that has created accounts that allow major investors to invest in a Trust that holds actual Bitcoin (and other cryptocurrency). They currently have $38.1 Billion in Bitcoin assets under management, and they are adding more to that regularly.
These are just a few of the major examples of institutional investors that are buying Bitcoin at a very rapid rate. There are many others that have either already purchased, or have publicly stated that they are considering it.
Major Investors Creating a Floor
In addition to buying billions in Bitcoin, having major investors involved in the market brings another major advantage. Unlike small investors, these institutional level players have billions of dollars available to them in other assets. If they begin to see the price of Bitcoin drop below a level they are comfortable with, they can begin buying it up at the discounted price. This not only allows them to acquire more Bitcoin at a lower price, but it also prevents the price from dropping so much that the market panics.
It is Easier than Ever to Buy Bitcoin
Another major factor that is different today than during previous bull runs is the ease at which people can purchase Bitcoin. In the past, investors interested in Bitcoin would have to find a reputable exchange that offers Bitcoin, go through the sign-up process, and hope that their bank would allow them to add funds to the account. Even that process was much easier than it was more than 6 or 7 years ago when it really took a technology expert to figure it out.
Today, anyone can purchase Bitcoin with just a few clicks. The incredibly popular CashApp, for example, allows their users to buy Bitcoin with just a few taps. They have helped millions of their customers purchase Bitcoin over the years. Most customers just buy a fraction of a Bitcoin, but it adds up over time.
More recently, PayPal launched a feature that would allow customers to purchase Bitcoin as well. Since this launch, customers have purchased thousands of Bitcoins, which are held in custody by PayPal. In fact, since PayPal began offering this as an option, PayPal customers alone have purchased an amount that makes up for about 70% of all newly mined Bitcoin. This creates incredible buy pressure, which has helped to keep the upward momentum going.
Services such as Venmo have also come out and said that they are looking into ways to allow their customers to buy Bitcoin. Even major financial institutions have begun offering Bitcoin as a part of their overall investment options.
Bitcoin is an Investment Like No Other
While there are obviously many significant factors that have helped to cause Bitcoin to reach $60,000 and beyond, this investment is definitely not without risk. Bitcoin is one of the most volatile assets in history. There are many things that are in place today that could very well prevent a bear market from driving the price of Bitcoin down by 60+% like has happened in the past. Despite these things, however, it is still a very real possibility that anyone thinking about buying Bitcoin or any cryptocurrency needs to consider carefully.