Chainalysis recently published an article entitled “Why Bitcoin is on the Rise and How This Rally is Different from 2017 (Hint: Who is Buying).”
The blockchain analytics firm pointed to the amazing form of Bitcoin, in which the leading cryptocurrency has appreciated 150% in value since early 2020.
For the past two months the price has been on the way for BTC crack key resistance levels. It is currently up 3% on that day to $ 18.2,000.
Additionally, technical analysis suggests that any rise above this level could trigger a rally to $ 19,000.
Source: BTCUSDT on TradingView.com
With the price close to the all-time high of $ 20,000 in 2017, it’s natural to draw parallels between then and now.
However, Chainalysis assumes that the underlying market conditions are different from three years ago. Now the surge in institutional buyers sees a smarter and more strategic market.
Private investors are no longer majority buyers
According to Chainalysis, most of the Bitcoin buyers in 2017 were retail investors who bought the cryptocurrency with personal funds.
They say the diffusion of knowledge and experience about cryptocurrency among these retail investors has been great.
However, something will change in 2020 as incumbents and financial institutions are now buying up most of the bitcoin.
“As anyone reading the news can tell you, 2020 will be the year institutional dollars flow into Bitcoin.”
This results in a surge in high value transfers leaving the exchanges in 2020. The graph below shows a steady increase in transfers valued at over $ 1 million over the course of 2020.
The analytics firm goes on to say that macro uncertainty is the main driver behind this change. Given the ongoing panic situation, institutions are being forced to look for alternatives such as Bitcoin to hedge against deteriorating economic conditions.
Institutions view Bitcoin as a consequence of macro uncertainty
Chainalysis quotes billionaire Paul Tudor Jones, who spoke about his concerns about central bank monetary printing.
“As early as March and April, given the monetary policy the Fed was pursuing, the incredible quantitative easing it and other central banks were doing, it became clear that we were in an unprecedented time … you had to start thinking about how you were going to tackle inflation defend. ”
Tudor Jones isn’t the only one expressing discomfort with the macro image. In the past few months, there has been a cascade of high profile personalities who supported Bitcoin during these precarious times.
Perhaps most notable is Michael Saylor, whose company MicroStrategy became the first publicly traded company to buy Bitcoin.
Back in September, Saylor spoke publicly about his fear of holding cash, as the inflation risk of MicroStrategy as a cash-rich company was too great a risk for him.
“First of all, I have a mega, mega, mega problem, and the problem is that I have a lot of money and I see it melt … [On investors] You are smarter than me, I’m not joking, I’m serious, you are smarter than me. They knew before I knew cash was rubbish and you’re a fool to sit on money. ”
By converting that money into Bitcoin, Saylor said he was more confident about the company’s future.