For example, last week, when the currency soared near the $ 30,000 threshold, a number of experts warned investors not to prepare for a strike, indicating that the main cryptocurrency unit is on the verge of a correction and could fall back to around $ 20,000 . Area.
However, in just one day, Bitcoin played with the bulls again, tested the $ 38,500 limit again, only to witness the sale and eventually settled in the region of $ 33,500. While for most cryptocurrency veterans it may be just another day in office, others have described the increase as “Elon Candle”, which is linked to Elon Musk, CEO of Tesla, who also included “Bitcoin” in his Twitter summary. as posted The following coded message “Later it was inevitable” to over 40 million followers online.
Whatever the reason, have institutional investors feared recent price changes, or do they still want to buy bitcoins? But if that is the case, it’s strange to see BTC continue to fluctuate in the $ 30,000 to $ 40,000 range amid reports of high-profile players using large amounts of bitcoin. For example, on January 22, when BTC was down 15%, MicroStrategy announced a new BTC purchase of around $ 10 million.
On this occasion, George Donnelly, CEO of Panmoni, a trading system for Bitcoin Cash, told Cointelegraph that no one doubts whether institutions will continue to buy bitcoins and said:
Grayscale is expanding to create more new DeFi trusts, and people are buying MicroStrategy shares to access BTC. BTC can be stuck at around 30,000 as retail trade appears to be weak. This beef market is not as noisy as the previous market. Few people seem to care. ”
In addition, it was believed that the main reason BTC could not penetrate the coin was that coin developers “deliberately limited network bandwidth for ideological reasons” and even tried to redirect use to their second-order networks, thus reducing ecosystem security. . … Nevertheless, he believes that the exchange rate over the next three months will “exceed 40 thousand dollars.”
Bitcoin has not stopped, it is just adapting
With another $ 2 trillion stimulus package underway, apparently thanks to the new US President Joe Biden and the Federal Reserve, there is a lot of buzz around the cryptocurrency again, especially as more people begin to understand the future implications of such uncontrolled cash printing. How this is done can reduce the value of the US dollar to unprecedented levels.
Felipe Castro, co-founder of Utrust, an e-commerce platform that supports cryptography, told Cointelegraph that continued expansion or rather dilution of the pool of US dollar funds will sooner or later lead to underlying inflationary effects. In the US economy, he adds:
“Although consumers of goods and services did not feel inflation strongly, this was evidenced by the growth in dollar-denominated assets such as stock market valuations, real estate, commodities and cryptocurrencies. Many institutions chose not to use cash as a safe haven, but instead invested capital accordingly. ”
He also emphasized that institutions usually do not trade directly in the market, but rather buy from a custodian broker who usually provides the necessary liquidity up front, thus minimizing the direct market effect at the entrance of large buyers.
From a layman’s perspective, this means that the increase in demand reverses asynchronously over time, and what’s more, it happens with large cyclical fluctuations, rather than the rapid result of recent announcements. He added: “Therefore, it is likely that future increases will take time to emerge, and will appear in large and sharp fluctuations.”
The institutional interest will not happen at any time
While one may be tempted to think that the current interest in cryptocurrencies may eventually have faded, it is worth noting that institutional buying cycles work very differently than individual and small institutional traders.
For example, Castro stressed that only a few organizations have taken an active stance on Bitcoin, including some family offices. Not only that, but it is worth noting that new approval and risk assessment procedures can usually take months or years and represent a whole new investment model for many traditional investors.
On this occasion, Lennix Lai, Director of Financial Markets for OKEx Cryptocurrency Exchange, indicated to Cointelegraph that since then the global reserve currency, the US dollar, has weakened significantly.