Is there any doubt that we are in the early stages of a crypto bull run ? Pick a metric, any metric, and the odds are good it will suggest it.
For example, the total value of the capital locked in DeFi has never been higher.
Likewise, the total crypto market cap is hovering in and around its all-time high of $ 1.1 trillion
Despite numerous crypto newbies popping up on social media, the reality is: retail investors are not here yet. At least not as much as three years ago, during the last bull run.
A look at Google Trends confirms this. The search queries for the keyword “cryptocurrencies” are expected to reach 56 by the end of January 2021. Although this is a bullish sign, it is still far from the values in January 2018.
Keyword “Crypto” on Google Trends, source: trends.google.com
Back then, the ICO craze and the Bitcoin Rush app of private investors, who were often out for a quick buck, drove the market up.
But this time around, it’s institutional investors who are the driving force behind this bull run.
Earlier this year, PwC’s Global Crypto Leader Henri Arslanian said:
“If you look at this bitcoin rally that we’ve seen over the past few weeks and months, there are really two big elements that are driving it. One is the continuous entry of institutional players. But there are also a lot of regulated players. That wasn’t the case a few years ago. “
Why the institutional interest?
The outbreak of the pandemic turned everything we believed we knew on its head.
Broken supply lines, mass unemployment and fiscal incentives highlighted the fragility of the global economic order.
As difficult and stressful as it is to go through this, the only silver lining is a flight into anti-inflationary assets, particularly Bitcoin. It has benefited from the increasing demand for it as more and more people buy Bitcoin.
The realization that you are sitting on dry land with cash has called the institutional investors on the scene.
MicroStrategy got the ball rolling as the first publicly traded company to hold Bitcoin as part of its treasury strategy. Once one institution “joined the party”, others followed suit.
This is expected to gain momentum through 2021.
Aside from the price spike aspect, it’s unclear how that will affect the cryptocurrency industry.
However, the fact that big names like Square, PayPal, and even JP Morgan are on board adds a touch of legitimacy to it all. And that’s one thing that was missing during the last bull run.