The main reason behind Bitcoin’s rally lies on big-time players purchasing bulks of Bitcoin and not retail or mainstream investors as revealed by key data.
During Bitcoin’s first major rally in 2017, consistent mainstream media coverage and rise in social media attention influenced the increasing price of the world’s first cryptocurrency. However, data on Google Trends reveal this isn’t the driving force behind the current Bitcoin bull market. The interest in the keyword ‘Bitcoin’ is relatively low, suggesting that mainstream interest is not causing significant changes in the market.
Instead, major investment companies or high-net-worth investors are possibly the reason why Bitcoin’s price keeps rising. Huge amounts of money invested by institutional investors mainly cause Bitcoin’s bull run and not mainstream adoption. Unlike in the 2017 major run, retail and mainstream users are not the main drivers of today’s bull market.
Data showing large amounts of money entering exchange sites signify smart money or capital invested by trusted market players have been driving Bitcoin’s bull run in the last few months. Huge chunks of money consistently placed, not just by old investors but also by new investors, are causing the chart to spike dramatically.
According to on-chain analyst Willy Woo, big-time investors are causing the continuous climb of Bitcoin’s price. Presenting a chart from Glassnode, he points out in a tweet that the average transaction value between investors is taking a big jump upwards. ‘Best of all,’ he adds, ‘We are not just seeing smart money flow in, it’s NEW smart money.’ This implies that more and more institutional investors are joining the hype and buying significant numbers of Bitcoin.
Optimistic signs for a longer bullish run
Historically, when institutional investors put money in an investment, it attracts the attention of individual investors since they are trusted as the professionals of the financial industry. When these institutions put money on a novel asset, it’s considered as a bullish sign, which can only mean that the present phase is only the beginning of Bitcoin’s major bull trend. In the words of Woo, ‘Bitcoin is still in [the] stealth phase of its bull run.’
Additionally, the large money from whales is yet to enter the cryptocurrency market. Whales are investors with a large stake on coins who can largely influence the price simply by buying or selling a significant chunk of an asset.
When whales buy large quantities of Bitcoin, it can only be a positive sign for the price of the coin. But aside from the increasing quantity of bought coins, the significant increase in the number of participating whales itself signifies a more major change in the future. More dramatic spikes can only be expected in the coming weeks or months.
In late October, a large number of Bitcoins moved out of centralized exchanges and towards personal wallets as revealed by blockchain data analyst Glassnode. Analysts say this indicates more people are holding onto BTC with a long-term investment strategy in mind. This shows long-term interest in Bitcoin from the public which adds to the overall bullish sentiment for the coin.
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