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

SINGAPORE – According to PwC’s global crypto leader Henry Arslan, the record-breaking rally of bitcoins seen in recent weeks was partly driven by the entry of more large, institutional investors into the market.

The digital currency surpassed $ 30,000 for the first time on Saturday and rose more than 300% in 2020. On Monday afternoon in Asia, bitcoin traded at around $ 32,668.93, according to CoinDesk.

Cryptocurrency has been around for over a decade, but only last year it began to gain popularity among mainstream institutional investors. The crypto bull has said that bitcoin is seen as a hedge against inflation, similar to gold.

“When you look at this bitcoin rally that we’ve been seeing in the last few weeks and months, in reality, there are two elements driving it. One is the continued entry of institutional players,” Arslanian told CNBC’s “Street on Monday Abs Asia “. . “

Bitcoin’s price revival last year was in part supported by well-known Wall Street billionaires publicly supporting cryptocurrency. Analysts said their support convinced skeptical, mainstream investors. Investors such as Paul Tudor Jones and Stanley Druckenmiller have both invested money in bitcoin and pointed to its possibility as a possibility of inflation.

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Big financial companies like PayPal and Fidelity have also ventured into cryptocurrency. While the likes of Square and MicroStrategy have used their balance sheets to buy bitcoins.

Arslanian said he expected the trend to continue in the coming months, pointing out that there are now various tools that allow institutional players to be exposed to bitcoin. “But at the same time there are many regulated players. This was not the case a few years ago,” he said.

According to Arslanian, the second development driving the current bitcoin rally is the fear of retail investors and their disappearance. He said that today more people have accounts on crypto exchanges than before buying cryptocurrency, now easier than before.

“On running it with these two big elements, there is a lot of momentum in the space. There is a lot of optimism in crypto markets as well,” he said.

Bitcoin’s recent performance is reminiscent of its frenzied rally of up to around $ 20,000 in 2017, followed by billions of dollars in market capitalization of major cryptocurrencies in 2018. But crypto fans say the current rally is different because it is driven by institutional purchases rather than retail speculation.

For his part, Arslanian said a big difference seen in this rally and 2017 is the clarity in the rules, which was rare back then. Today, he said, most regulators around the world have people working on cryptocurrencies internally. Many large financial centers “have very good regulatory clarity on crypto markets and which are comforting not only to institutional investors, but also to retail investors as well as those coming into the market,” he said.

While Arslan refused to place a price target on bitcoin for this year, he said the current momentum remains optimistic. He said, “Over the price of bitcoin, I am seeing the number of new institutional players coming in, which I think is an external influence on the markets.”

Ryan Brown of CNBC contributed to this report.


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