Bitcoin has regained its momentum after weeks of lacklustre prices. In an increasingly volatile sector, knowing the factors impacting its growth are crucial. We highlight the key ones in the article below.
Bitcoin is back on a slow but upward path. After months of post-high scepticism, renewed interest in the cryptocurrency is underway. This week, Bitcoin price monitoring showed the currency reached $88,350 with many predicting it is going to continue over the $100,000 mark once again. This is due to only two weeks ago trading at $77,500.
Increase in Wallets and Whale Activity
What is more interesting than its constantly changing price, and a positive sign for long-term investors, is the number of wallets holding it. These are generally in the 100 to 10,000 BTC range, signaling a new accumulation phase by crypto whales.
Another sign is the fund held by Bitcoin miners. Those who create Bitcoin have been under renewed pressure in the past year. A halving event cut their reward, while high energy prices have slashed profits. However, the reserve for crypto miners has grown to $98,000 with no major selling activity.
Bitcoin is approaching key resistance levels. These are at the $90,000 mark most significantly. However, with these factors at play and a few other factors, such as ETF inflows, it may be another reason to spur the markets on further.
Higher Prices Predicted
There have also been prominent voices predicting even higher prices for Bitcoin in the not-too-distant future. The CEO of Blackrock, the world’s largest investment manager, has speculated that with institutional adoption the coin could reach as high as $700,000. The comments were made in Davos, where Larry Fink was speaking at the World Economic Forum. He believed that if everyone adopted this way of thinking, it could move from $500,000 to $600,000 and finally to $700,000.
Also speaking at the conference was the head of AI firm G42. Peng Xiao described cryptocurrency as the “Currency of AI”. Fink then went on to discuss how he believed that many countries and economies fear crypto, feeling that it will destabilize their currency. However, he also went on to discuss how it can be a hedge against global instability and quell local fears.
The Race for Europe
The real race for crypto customers has been going on in Europe. A much smaller market than the US, this has primarily focused on Bitcoin ETF products.
ETF manager WisdomTree has attempted to remain competitive by dropping fees from its Physical Bitcoin ETP. This will run from late March to the end of the year. This brings the combined cost of managing the fund to 0.15%, which is the lowest fee in Europe. This is an obvious reaction to BlackRock’s recent move into the sector and a way to keep it competitive.
Last year, this fund was the leader in the European market of Bitcoin ETF products and recorded $232 million in inflows. It has been running for five years and is listed on exchanges in Germany, Switzerland, France, and the Netherlands. Thus, it is in direct competition with BlackRock products in a market it has largely owned for the last five years.
GameStop Moves Into Bitcoin
Further signs of the corporate world seeing Bitcoin as a viable investment came this week from GameStop, the troubled high street retailer. On Monday, its shares rose by around 12% as they broke news of increased profit for the quarter, and a plan to buy Bitcoin. This share price was later reduced by 6% when it announced that it was aiming to buy Bitcoin to the value of $1.3 billion with convertible senior notes.
This is a security, which provides investors with a security that can be turned into shares. In the event of bankruptcy, it takes precedence over other debts. Just like other debt investments, they do allow the bearer to claim interest. These build up and this is owed by the company over time.
The first inclination that GameStop may be looking at crypto options was in February, when it was reported by CNBC. Fuel was added to the fire when its CEO, Ryan Cohen, began posting images of himself with senior members of Strategy. Formerly known as Microstrategy, this software company has begun to amass Bitcoin and they now hold 447,000 coins.
There are those who are very sceptical about Bitcoin turning around the company’s fortunes. The biggest worry is that the company’s strategy has changed several times in the last three years, as opposed to the company named Strategy which has done this once.
GameStop also has the tag of being a meme stock. This is a share that gains traction through social media. These are known to trade at prices that are above their actual real value. In fact, GameStop was the company that coined the phrase when traction on social platforms caused a buying spree, leading to a short squeeze.
All this does signal is further institutional investment. It seems that only macroeconomic factors are currently holding Bitcoin back, with the corporate and investment world maintaining a heady interest. This can only be good for those looking to invest in the long term.