Bitcoin Punches Through All-Time Highs As Institutions Buy BTC
For years, we were told the same thing — just wait until the herd arrives. Billionaire Mike Novogratz famously told a crowd that the herd was indeed on its way to crypto.
Who is the herd exactly? As you might have guessed, the herd is made up of retail buyers. Everyone from college kids to Robinhood investors will hop into crypto just as they did in late 2017 as the heat around Bitcoin increases.
Even more important than the retail sector is the other side of the herd — institutional buyers. These are the big guns with hundreds of millions or even billions of dollars worth of assets under management. Some of them you've heard of, some you haven't, but at the end of the day, their entry into cryptocurrency investing is a massive milestone providing plenty of rocket fuel.
In 2020, several of these institutions made very public entrances while others quietly bought in using Coinbase to broker a big deal. These moves helped push Bitcoin through its all-time high at and above $20,000, followed by yet another ATH at the $24K mark only days later.
Not content to pause at $24K, Bitcoin set high after high, culminating in a touch at $28K mere days after Christmas and $34k after the new year.
Let's take a look at the path Bitcoin took in 2020 to arrive at its current heights and salute the large buyers who showed up in force.
Blockchain is a form of distributed ledger technology, perhaps the simplest and most popular example. DLT itself is a secure system of records.
Bitcoin's blistering run started with a crash
Bitcoin's moon mission started with something unexpected in true crypto fashion — a crash near recent lows in the $4K region.
As the emergence of the pandemic made itself known worldwide, markets stumbled, wobbled, then hit the ground face-first. Poor economic data seemed to confirm the global recession everyone feared, and a mass sell-off ensued.
Bitcoin took a hard hit as it tanked from $10K to just a hair above $3K, but buyers quickly showed support as a speedy recovery brought BTC back above $6K. Traditional markets recovered in kind as governments expedited stimulus packages to the people, but few expected what would come next.
The DeFi Summer defies expectations, then MicroStrategy's makes a macro buy
As Bitcoin crept back toward the $10K mark, another recovery of sorts was getting underway. During the 2019 bear market, several decentralized finance crypto projects had started building financial products for the future.
Compound, Aave, Curve, Synthetix, Yearn Finance, Uniswap, and Ren Protocol — to name a few — had quietly created a crypto renaissance while few were watching. Once people noticed, a surge in cryptocurrency buying propelled an altcoin season unseen since a brief run in the summer of 2019.
DeFi proved to be much more than a meme. The DeFi Summer technically started in the spring and is still going strong well into the winter.
Boosting market confidence during the summer was a gargantuan investment made by the curiously named MicroStrategy company. The company bought BTC worth $425 million at and around the $9K price point in a display of strategy that is undoubtedly more macro than micro.
At nearly the same time, Square Inc., the FinTech company owned by Twitter's Jack Dorsey, also completed a $50 million Bitcoin purchase.
Decentralized finance is something crypto insiders have passionately harped on about for years without really explaining the concept.
Ruffer Investment buys nearly $1 billion worth of Bitcoin
As if seeking to intentionally dwarf the purchases of both Square and MicroStrategy, Ruffer Investment, a British wealth management firm, recently confirmed a Bitcoin buy totaling $744 million.
The outrageous size of the buy from an otherwise traditional investment fund signals one fact very clearly — the herd is here. Ruffer Investment's Coinbase-brokered purchase shows that Bitcoin has gone beyond novelty and is widely accepted by the inner circles of global wealth.
After Ruffer's entry, a cadre of analysts with Citibank, Goldman Sachs, and JP Morgan "leaked" documents citing a broad belief that BTC will soon be worth at least $100,000, with at least one report quoting a figure north of $300,000.
The best analysts have given Bitcoin a hard look and like what they see
Firms like Ruffer, MicroStrategy, and Citibank don't jump with their eyes closed. No — they walk very gingerly after deploying as many eyes on the situation as is possible.
Now imagine that the world's best and brightest financial analysts have all had ample time to parse every iota of Bitcoin data available. Then, realize that all their analysis using the latest in computing, strategy, mathematics resulted in billions of dollars being spent on Bitcoin.
While nothing in life is a certainty, large financial institutions tend to make moves only after deciding their choices have the looks, feel, and probability of certainty. In this way, as a retail investor, you can piggyback off of their hard work by reading into their conclusions and making choices for yourself.
Notably, many of the bullish analyses are left to dangle to the public on purpose to generate retail hype. After all, Citibank is here to make money for themselves and their clients, which means using media clout to pump up expectations around BTC.
As such, you should always take CoinDesk reports about $500K BTC prices with a grain of salt. But it would be unwise to ignore the emergence of the herd as once foretold.
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