The appetite for Bitcoin among institutional investors continues to grow at a fast pace.
Every week, a new company or public figure announces its investment in Bitcoin or the digital assets’ potential as a store of value, much like gold.
This appetite can be seen with the Bitwise’s Crypto Index Fund — with 75% BTC, 13% Ethereum, and 12% other crypto assets weightage — which surged more than 70% in a couple of days of its launch, that too while the digital assets slipped by a few percentages.
But over the weekend, the crypto market took over as BTC went from $17,600 earlier in the week to $19,500 on Sunday.
Today, BTC/USD is trading around $19,150, down 0.09% with $2.24 billion in volume.
Still, the largest cryptocurrency is up 166% YTD, and this Bitcoin rally is “fundamentally sound,” according to Antoni Trenchev, co-founder of Nexo.
According to him, any dips are just Christmas coming early — “a great entry point for you to purchase some Bitcoin just before liftoff,” said Trenchev in a recent interview with Bloomberg.
These price drops, according to him, are profit-taking and the rumor about last-minute legislation from the Trump administration, which according to him are just going to be more anti-money laundering and know-your-customer policies “just like in the banking sector.”
However, the new legislation will ultimately be a “very valid bridge bullish sign for Bitcoin, and that will set the stage for the next leg up,” he said.
Nowhere Near the Top
According to Trenchev, his predicted a $50,000 BTC target price by the end of the year “is a reasonable price target even for Q1 to Q2 of next year.”
The reason for his bullishness is simple, since the summer, the market has seen retail, institutional investors, high net worth individuals, and family offices positioning themselves and purchasing Bitcoin and other cryptos. And this is
“very different from what we had 2017 and 2018 where this was a really retail-driven frenzy where everybody was maxing out on leverage and credits to buy bitcoin.
This has not yet happened.”
Although retail has come, it is nowhere near what we saw in 2017, which makes this rally “fundamentally much more sound,” he added.
In the macro scheme of things, all the stimulus unleashed by the central banks and government in 2020 will continue moving into next year. As we reported last week, the ECB has already announced its big numbers, and the US might reach a compromise on the relief package soon.
Morgan Stanley chief rates strategist also noted that G10 central banks would inject another US$2.8 trillion of liquidity next year – just in their government bond purchases.
This is to be seen if and when all this liquidity will find its way into the financial and Bitcoin market. We are already seeing some rotation out of gold and into Bitcoin this year, thanks to the latter’s digital gold narrative.