Over the past 12 months, Bitcoins has risen more than 500%. Will the VTC rally continue or is it time to prepare for a prolonged correction? We found out from the experts.
During the period of quarantines and market volatility, the IT sector and cryptocurrencies won the most. The combined value of all digital coins in circulation exceeded $2 billion, and bitcoin set an all-time high above $64,000.
A temporary cold snap
Despite the correction that pushed BTC below $50,000, the major cryptocurrency is worth 500% more than it was in April 2020.
Experts advise against panicking about bitcoin’s current correction. In the long term, it retains strong bullish potential.
According to Tatyana Maksimenko of the cryptocurrency exchange Garantex, bitcoin has several fundamental reasons for growth, including interest from institutional investors.
“First, they have significant financial resources at their disposal. Second, a lot of people are guided by them: if funds are interested in the asset, ordinary investors follow VC. There are whole lines of tracking the market movements of a major player on the exchange, and the winning strategy is to swim after the whale. That is why when large funds like Grayscale, Microstrategy transfer assets into bitcoin, these are the same “three green whistles” for the market: “buy”, – commented the expert.
Bitcoins has been growing since its inception.
Institutional investors began investing in bitcoin back during the previous bull trend in the market, in 2017. Back then, however, there were many legal barriers that complicated the process.
Since then, investment vehicles have emerged that allow you to legally and invest in cryptocurrency assets. For example, Grayscale Investments, an SEC-regulated investment company, offers tools based on popular cryptocurrencies. They allow you to make money on digital assets without direct involvement. The scheme is similar to traditional exchange-traded instruments in gold, silver, platinum and other commodity assets.
Institutions are bucking the bullish trend
According to Andrew Podolyan, CEO of the Cryptorg exchange, large investment funds are trying to increase the share of bitcoin in their portfolios in order not to be left out of the new reality. This boosts demand for the cryptocurrency and pushes the price up.
“With more bitcoin in circulation, funds will be able to dictate their terms. Don’t forget that every year a large amount of BTC is lost and access to it is lost forever. This, too, plays into the hands of value growth,” the expert noted.
The current run, above all, is characterized by awareness. If in 2017 everyone perceived the growth solely as a HYIP, now many purchase BTC as a ticket to the future. Or consciously speculate on it. With the advent of futures trading, for many, the top cryptocurrencies have become another tool for daily speculation and building their own portfolios.
In February 2021, a bitcoin ETF was launched in Canada. In the first 10 days after its launch, the Canadian Purpose Bitcoin ETF attracted $624 million, or just over 10,000 bitcoins, from investors. The very next day after Purpose Bitcoin ETF was approved, the Ontario Securities Commission (OSC) approved the second BTC-based ETF – Evolve Bitcoin-ETF. The U.S. SEC is still waiting, but according to forecasts, the U.S. will soon have its own exchange-traded cryptocurrency fund.