Bitcoin (BTC) rally is partly driven by more institutional investors, says PWC

SINGAPORE – Bitcoin’s record-smashing rally was seen in recent weeks, in part. The market was driven by the entry of larger, institutional investors, according to Henry Arslanian, global crypto leader at PwC.

The digital currency surpassed 30,000 for the first time on Saturday and rose more than 300% in 2020, according to a Reuters report. In Asia, Bitcoin traded around, 32,668.93 on Monday afternoon, according to Syndesk.

Cryptocurrency has been around for a little over a decade, but it only began to gain popularity among mainstream institutional investors last year. Crypto bulls have said that bitcoin is seen as a hedge against inflation like gold.

“When you see this bitcoin rally that we’ve been seeing over the last few weeks and months, really, there are two big elements driving it. The constant entry of an institutional player,” CSBC’s “Arsenal told Monday on Street Signs Asia.”

The rise in bitcoin prices last year was partly due to the well-known Wall Street billionaire publicly supporting cryptocurrency. Analysts said their support has given confidence to otherwise dubious, mainstream investors. Investors like Paul Tudor Jones and Stanley Duknmiller have put money into Bitcoin and shown its potential as a hedge of inflation.

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Big financial companies like PayPal and Fidelity have also made moves in cryptocurrency While Square and MicroStrategy favorites have used their own balance sheets to buy Bitcoin.

Arsenal said he expects that trend to continue for months to come, pointing out that there are now many tools that allow institutional players to come into contact with Bitcoin. “But there are also a lot of regulatory players. That didn’t happen a few years ago.”

Another development driving the current bitcoin rally is retail investors and fears of their disappearance, according to ArcelorMittal. “Buying cryptocurrencies is now easier than ever before and many more people have accounts on crypto exchanges today,” he said.

“With these two big elements running it, there’s a lot of momentum going on in space. There’s also a lot of optimism in crypto markets,” he said.

The recent performance of Bitcoin is reminiscent of its રે 20,000 rally in 2017, which was wiping out billions of dollars in the market capitalization of large cryptocurrencies following a sharp pullback in 2018. But crypto fans say the current boom is different because it is driven by institutional buying rather than retail speculation.

For his part, Arsenal said the big difference between the rally and the one seen in 2017 was the clarity in the rules, which was rarely seen at the time. Today, he said, most regulators around the world have people working internally on crypto. He said many large financial centers have good regulatory clarity on crypto markets and it gives comfort to not only institutional investors but also retail investors to enter the market.

While Arsenal and he refused to set price targets on Bitcoin for this year, he said the current pace is optimistic. He added, “More than the price of Bitcoin, I’m seeing a number of new institutional players, which I think has a significant impact on the markets.”

Ryan Brown of CNBC contributed to this report.