In the history of the financial market, only a few marketable assets exceeded this limit. Bitcoin is currently the eighth largest by market capitalization of all traded assets in the world, including stocks and commodities. Among the top 10 tradable assets, located just above Tencent, Bitcoin launched into a potential $ 1 trillion wave, and the least being Facebook, which was canceled earlier this month.
Bitcoin is only one step away from overtaking Google and two steps away from silver. With the history of commodities like silver and gold that have been in circulation for centuries, the history of Bitcoin is very short, starting in January 2009 is nothing more than an experiment. Even stocks like Google and Tencent have a history of more than two decades, and Apple and Microsoft are more than four decades old.
Was Bitcoin’s recent gains organic?
By analyzing when Bitcoin came into existence, and which ultimately broke that milestone, it is clear that there was no major institutional data set that would lead to an increase in market capitalization. Coinbase’s Bitcoin Premium Index from network data provider CryptoQuant – when the premium is high, it indicates the strength of instant buying on Coinbase – indicates that Coinbase’s premium was negative at the time of this breach.
Ki Yong Joo, CEO of CryptoQuant, explained to Cointelegraph that this indicates that “purchasing power comes primarily from sedentary whales and individual investors, not from institutional or large individual investors in the United States.”
Finally, Bitcoin (BTC) crossed the $ 1 trillion mark on February 19 and tripled its market value in just three months. The milestone comes nearly a year after saving less than $ 100 billion on March 12, 2020, known in the cryptocurrency community as Black Thursday.
It is also important to consider the actual share of BTC in trading volume before drawing conclusions about the price implications of Bitcoin volumes. According to research by Glassnode, 78% of Bitcoin’s offerings are illiquid, so resourcing the asset is only a small aspect of how this affects price.
Fortunately or unfortunately for the market, the bitcoin price is still largely driven by emotion. This is evidenced by the fact that this year alone Robinhood has already attracted over 6 million crypto retail investors.
Aware of the presence of institutional investors and their overall influence, Jay Howe, CEO of the cryptocurrency exchange OKEx, told Cointelegraph that the Twitter trend could cause a trillion dollar squeeze: “This is a craze that has included Elon Musk, Michael Saylor and Senator Cynthia. Lummis BTC can help overcome it. A trillion dollar market is in the market without any final pressure from institutional investors who do not usually buy when the markets seem so tight. ”He added:
“ At this point, several technical indicators are indicating that BTC is starting to look into the overbought zone as retailers jumped, pushed by the laser-eye that has broken into Twitter as participants, including many senior executives and politicians, seek to gain 100,000. Bitcoin dollars. ”
Institutional involvement in Bitcoin can be overestimated
Venture capitalist Brooke Pearce, crypto-venture capitalist, told Cointelegraph that he thinks institutional participation may indeed be “overrated,” but still exists, as evidenced by its long positions:
Markets have grown thanks to a combination of retail, institutions and other factors. When it comes to cross-chain settlements, we see large amounts of bitcoins leaving the exchanges and miners unwilling to sell, thus reducing supply and reducing selling pressure in the market. ”
He also expressed his belief that companies accept “program purchases” when they try to acquire a specific share. Moreover, as Pearce and Howe point out, it is often the market sentiment that attracts retail investors, causing large price fluctuations in the bitcoin market.
Joe recently noted on Twitter that well-known miners often have special wallets separate from mining wallets; Thus, their power may be greater than which can be assumed by analyzing the circuit. He also explained the implications for the Bitcoin price:
“Related (whale) miners appear to be selling bitcoins on exchanges rather than through OTC agreements. They have different personal portfolios than mining portfolios, so it is important to see the trend and not the absolute number. There has been a massive outflow of outflows at 58,000 and has cooled recently.
Do institutions keep buying down?
After Bitcoin broke $ 1 trillion, it quickly continued to reach an all-time high of $ 58,352 on February 21. On the next day, however, BTC is down 20% along with many other prices.