Within six months, since January 2019, the bitcoin price has increased from less than $4,000 to almost $14,000, rising by a staggering $10,000 or 271% year-to-date against the U.S. dollar.
Investors like over-the-counter (OTC) crypto trader Yingfeng Shao and JPMorgan analysts have attributed the recent surge in the bitcoin price to the noticeably increasing institutional interest as seen in the numbers released by Digital Currency Group’s Grayscale and the premiums on crypto-related investment vehicles such as the Bitcoin Investment Trust (GBTC).
With Google Trends indicating that the mainstream interest towards bitcoin remains relatively low when compared to the interest seen in the 2017 bull market, there are expectations that the current upside movement of bitcoin could be the start of a larger wave of capital inflow.
According to Arthur Hayes, the CEO of BitMEX, the most widely utilized crypto margin trading platform in the global market, the daily volume of bitcoin on BitMEX has surpassed $11 billion and is nearing $12 billion as the demand for the dominant crypto asset has intensified.
The “Real 10” volume of bitcoin, which refers to the verifiable daily volume of bitcoin coming from exchanges regarded by Bitwise Asset Management for having a legitimate daily volume of over $1 million, is also nearing $5 billion for the first time in 2019. At its low point in March, the Real 10 volume of bitcoin hovered at around $500 million.
Disregarding volumes coming from Grayscale’s Bitcoin Investment Trust and alternative cryptocurrencies, BitMEX and the Real 10 volume alone account for nearly $17 billion in daily volume.
Many anticipate that the next wave of investments into the crypto market would come from retail investors and according to OTC trader Yingfeng Shao, the recent crypto market rally has not been triggered by the inflow of new capital.
Shao said speaking to CoinDesk:
“The question is where is the money coming from and I think my take on it is that until you can prove to me that new retail money or new institutional money, this sort of large pool of funds, that is just sloshing around inside the space [then people who already put some money into the space are behind the rally].”
Hence, if the retail demand for bitcoin begins to see a significant increase in the upcoming months due to the rising value of the asset, there exists a possibility that the retail interest synergizes with increasing institutional demand and act as another catalyst for the market.
On CNBC’s Futures Now, Kristina Hooper, the Chief Global Market Strategist at Invesco, indicated that investors may be considering bitcoin as a safe haven asset in light of intensifying geopolitical risks fueled by the dispute between the U.S. and China.
“I think that bitcoin might be a sign of fears about recession but certainly, it makes sense in this environment that we see investors looking for safe havens but I think it is a mistake with the Federal Reserve signaling its willingness to be a lot more dovish,” Hooper said.
The market valuation of bitcoin, despite its 217 percent year-to-date gain, remains at around $245 billion while the market cap of gold is estimated to be $8 trillion.
While it may be far-fetched to claim that the U.S.-China trade war has been a catalyst of the upside movement of bitcoin, some strategists foresee the rising price of the asset at a point in which the global financial market is demonstrating a sign of uncertainty allowing bitcoin to become more compelling to a broader market of investors.