Chainalysis: Bitcoin doubles after the halving, driven by institutions

Since the third halving, Bitcoin’s price has doubled—from $8,570 to more than $18,000. Chainalysis attributed this to an ‘insatiable appetite’ among institutional investors.

\n

Overall, we think the 2020 Bitcoin surge is a sign of the cryptocurrency market’s maturation. You can read the full blog here for more data and analysis. https://t.co/epCpnnRzZC

\n

— Chainalysis (@chainalysis) November 19, 2020

\n

\n

\n

Experts noted that miners have only about 3.4 million bitcoins left to mine. 77% of mined and unrecovered coins (14.8 million BTC) are held in illiquid wallets, from which on average less than a quarter of the assets they receive are moved.

\n

\n

Simply put: Demand is high at a time relatively few Bitcoin are available to buy. 77% of mined Bitcoin that hasn’t been lost is currently held in illiquid wallets that historically send less than 25% of Bitcoin they receive. That leaves a pool of just 3.4M BTC for buyers.

\n

— Chainalysis (@chainalysis) November 19, 2020

\n

\n

\n

Since the price peak in 2017, on so-called ‘investor wallets’ the number of bitcoins has risen by almost 3 million.

\n

In the same period, on the wallets of traders characterized by higher liquidity, this figure declined. Chainalysis says market participants provide supply for ‘new investors’.

\n

\n

The amount of Bitcoin available to buy is similar to during the 2017 bull run. But in 2017, not nearly as much was held in those illiquid wallets we mentioned, which we believe mostly belong to investors holding for the long term. pic.twitter.com/rtOHGSi0x0

\n

— Chainalysis (@chainalysis) November 19, 2020

\n

\n

\n

As long-term holders of Bitcoin, analysts highlighted institutional investors and corporations. They cited purchases by Paul Tudor Jones, Square and MicroStrategy. For such buyers, Bitcoin is a hedge against inflation and other worrying macroeconomic trends.

\n

\n

Why are they buying Bitcoin now? Largely as a hedge against inflation and other worrisome macroeconomic trends. Many investors have said this themselves, but we can also see it in the data.

\n

— Chainalysis (@chainalysis) November 19, 2020

\n

\n

\n

Analysts concluded that Bitcoin purchases in 2020, compared with 2017, are more strategic and not for speculation. They forecast inflows of other institutional investors and further broad adoption of Bitcoin. This would occur if the cryptocurrency confirms its status as an effective hedge against macroeconomic risks.

\n

Analysts at Deutsche Bank found that investors are increasingly preferring Bitcoin to gold.

\n

Former George Soros partner, billionaire Stanley Druckenmiller suggested that Bitcoin may prove to be a better store of value than gold.

\n

Citibank analysts suggested that the leading cryptocurrency will cement its status as digital gold and reach $318,315 by the end of 2021.

\n

Follow ForkLog news on VK!