Bitcoin Skyrockets on Wider Access to Funds and Institutional Interest

Saturday saw Bitcoin hitting $61,712, a new all-time high. On the same day, Ether broached $2,100, reaching $2,190, also a new record. According to published data, this was the first time Bitcoin traded above $60,000 for over three weeks, spending much of March trading from a low of $52,000 to the upper $50,000s.

Ether, the second-largest crypto by market capitalization came within a whisker of $2,200 just a few days after breaking the $2,100 level for the first time.

More People Are Investing in Crypto

It is yet unclear to investors whether there is an underlying reason why Bitcoin prices have surged. The current action comes just a matter of days before the Coinbase IPO takes place. The initial public offering is an eagerly anticipated event within the crypto industry and is seen as an indication of a maturing market.

Die-hard fans of crypto, as well as recent converts, see room for attractive returns. Talk is that Bitcoin may soon become a part of 401(k)s, estate plans, and individual retirement accounts. Institutional funds are flooding the market. It is deemed that this massive inflow of funds may be, at least partly responsible, for the latest rally.

Bitcoin investor and CEO of Abra, Mr. Bill Barhydt, is quoted as saying, “We are about to witness the emergence of a new industry, a new banking system based on this new type of investment.”

Major Bitcoin Investment Events

Recently, there have been several major events that are of particular interest to investors in Bitcoin. March saw Morgan Stanley providing wealthy clients access to funds that enable ownership of the cryptocurrency. It did not take long for Goldman Sachs to make similar moves. Investors are now awaiting the Coinbase IPO on April 14.

However, market volatility and security issues remain stumbling blocks for traditional investors. There remains a significant number of people who wonder if investing in Bitcoin will do anything more than make Bitcoin bulls richer. Analysts at Citi Global Perspectives and Solutions believe the future for Bitcoin is still somewhat uncertain.

Signs of Institutional Interest

Coinbase is seeing a significant uptick in the number of people investing in Bitcoin. Current users are estimated at 56 million in Q1, 2021, a 30 percent increase from the final quarter of 2020.

Coinbase also sees significant growth in users, more than doubling in the period to over six million. Revenue has tripled from Q4, 2020 to approximately $1.8 billion.

These are only two indications of mainstream acceptance. Diversified financial services company Fidelity Investments reports a fourfold increase in the number of institutional clients using its digital-asset service. During a recent interview, Terrence Dempsey of Fidelity Digital Assets says that since the last period of 2020 into Q1 2021, the company is seeing considerably more institutional activity. Investors are involved to a greater extent than in any other cycle.

Citi’s recent report noted that interest in CME bitcoin futures has increased by over 250 percent during the last quarter of 2020.

In It for the Long Haul

Available data indicates that an increasing number of people are holding crypto for the long haul. In December of last year, data available from Coin Metrics indicate that approximately 10 percent of bitcoin investors held the crypto for five years or more.

Michael Terpin operates a blockchain-focused public relations firm. He observed many people buying crypto in the years 2011 and 2012. He sees the returns as money for the buyer’s retirement.

At the moment, traditional retirement planning is a small part of investing in Cryptocurrency.  As crypto is very volatile, few people see this as being compatible with “set and forget” investments.

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Author: Jason Donaldson