Growing demand for BTC corresponds with evidence suggesting that it is no longer traded only by tech-savvy early adopters.
The evidence that bitcoin is in the early stages of another bull cycle is mounting. While the most obvious metric, price, attests to this, data from other sources bolster the theory. BTC is up over 20% in the past 30 days and is flirting with the $20,000 threshold, as it has several times in recent weeks. Data released by cryptocurrency exchange AAX supports the case for another bull market, with the platform reporting record volume during November.
On its busiest day in November, AAX saw $2.5 billion in trading volume, elevating the exchange into the big league and helping to propel Bitcoin to new highs. While bitcoin’s all-time high differs slightly across exchanges, Messari records it as standing at $20,089, a record that looks certain to be broken in the near future.
Diversification of Crypto Traders
Growing demand for BTC corresponds with evidence suggesting that it is no longer traded by tech-savvy early adopters – predominantly millennial males.
“Cryptocurrency is an asset class that refuses to be easily pigeon-holed or categorized with anything that’s gone before,” said AAX CEO Thor Chan. “And the same is true of the average cryptocurrency trader. Our anonymized user data shows that there is no ‘average’ crypto trader: today’s pros are more diverse and more distributed, geographically than ever before.”
Chan was commenting on data released by the exchange that revealed its traders to be older than the market average, at 33.8 years. AAX also reported robust demand for its services in the CIS states, where 61% of its volume originated during November. Russia and the former Soviet states have taken a keen interest in digital assets, circumventing governmental efforts to restrict bitcoin trading in some countries.
Bitcoin Rallies as Investors Flock In
Whereas the 2017 Bitcoin rally was driven by retail users, there is evidence that institutional buyers are accounting for a tranche of the volume on this occasion. At a time when many of its competitors were dismissive of crypto, institutional titan Fidelity, one of the largest investment managers in the world with over $3 trillion of assets under management (AUM), announced the launch of Fidelity Digital Assets. It wanted to tap into interest received from family offices, hedge funds, pensions, foundations, and other institutional investors.
Its new crypto arm provides secure custody, trading, and investment services to institutions interested in digital assets. More recently, it has launched a bitcoin fund, made available to qualified investors via family offices, registered investment advisors, and other institutions.
Fidelity Digital Assets has also announced it will allow institutional customers to use bitcoin as collateral against cash loans, in partnership with the crypto lender, BlockFi. The new service means bitcoin investors, as well as hedge fund clients, miners, and OTC desks can turn their holdings into cash without selling them.
The tide certainly seems to be turning in traditional finance. Larry Fink, CEO of BlackRock with $7.5 trillion AUM, suggested during a Council of Foreign Relations event with former Bank of England Governor Mark Carney that bitcoin could threaten the US Dollar’s reserve status in international markets and make it “less relevant.”
Where Next for Bitcoin?
As 2020 winds down, bitcoin is poised to enter the New Year on a roll. The momentum that has carried it to $20K territory, marking a growth of 172% for the year to date, looks unlikely to slow. Mainstream media coverage of bitcoin has been muted this time around, unlike the headlines that were everywhere three years ago. By the time mainstream investors catch on, bitcoin is likely to be past $20,000 and eyeing its next plateau. Where it stops after that is anyone’s guess. Once it surpasses $21K, the 21 million-supply cryptocurrency will be in uncharted territory.
next