In early February, another set of evidence came up with support for the belief that the continued surge in crypto prices has deep institutional roots. Market whisperer Elon Musk and Tesla’s announcement of a $ 1.5 billion position in Tesla have fueled the upward trend with more news from big names like Mastercard, Amazon and BNY Mellon.
Interest in the industry is sure to increase as the price of Bitcoin (BTC) is fast becoming a much debated topic on most finance-focused television networks. Is the public firmly in the back seat with big corporations at the head of the rally or does it affect how long the party will last?
The power of community
The power of corporations to move crypto markets stems from two interrelated sources: their own capital invested in digital assets and the ability to guide public opinion, often based on their own example.
Some companies have greater social clout than others due to factors such as the personal charisma of the founders or the public visibility of the brand. In Tesla’s case, these two merged, which resulted in the explosive effect we saw last week.
According to Nisa Amoils, partner at tech-focused Rolling Fund A100x, the fact that Tesla’s move was so momentous in the digital asset markets is no accident. Amoils told Cointelegraph that “Tesla and Bitcoin have more in common than you think, and it’s not just volatility,” added:
“Both have communities – almost religion – behind them, and this is an important trend that we can see in certain Protocols and DeFi as well. Elon is speaking to both retail and institutional this time around and set that up right after the GameStop retail surge. “
Amoils expected more corporate imitators to emerge in the short term, along with continued price movement. In the long term, she believes that the recent parade of institutional validation will help cement Bitcoin’s status not only as an investment vehicle but also as a medium of exchange: “A unique multi-function asset.”
The conversation with “retailers and institutions” seems to be of central importance here. Tesla’s move was so impressive because of the automaker’s unique position as a high-cap tech company and a popular brand with a significant social following. This is a reminder that institutional forces can have the greatest impact on financial markets today if they pull the crowd away.
The feeling is king
High street investors aren’t just a bunch of movie extras who quietly watch financial institutions and large corporations raise asset prices at will. For one thing, potential private investors in the US alone are sitting on a pot of money that roughly corresponds to the capitalization of the entire crypto market, and this money is waiting to be used.
Pat LaVecchia, CEO and co-chair of the digital securities market, Oasis Pro Markets, told Cointelegraph that the combination of available savings and the fear of missing out on the price move could drive more people into the industry:
“US. According to Oxford Economics, households have accumulated more than $ 1.6 trillion in savings in the last year. If people look for new asset classes at home, it could lead to more interest because interest rates are so low are [in cryptocurrencies]. As the institutional sentiment grows and the general public sees large institutions step in and legitimize Bitcoin, FOMO may be used for those who are still on the sidelines. “
If one takes this line of argument further, a direct consequence of the current institutional or next rally could be the large-scale influx of individual investors. Sooner or later, many iterations of this process should result in digital assets reaching the holy grail of mass adoption.
Keeping track of public opinion on crypto is therefore no less important than keeping track of the steps taken by institutions. So far, things have been looking good on this front. Joshua Frank, co-founder and CEO of crypto data provider The Tie, told Cointelegraph that Twitter activity on Bitcoin has soared to an all-time high after the Tesla news.
In addition, Bitcoin’s Daily Sentiment Score, which measures how positive or negative conversations have been on a topic in the past 24 hours, compared to a 20-day moving average, hit an annual high. These metrics show that Twitter users’ mood was extremely optimistic in the short term.
The long-term sentiment metrics looked promising too. Frank added that Bitcoin’s long-term sentiment score, which measures how positive investors have been on the asset over the past 50 days compared to the last 200, has risen significantly, reaching 75 out of 100. Frank explained to Cointelegraph:
“A consistently positive long-term sentiment score means investors continue to view Bitcoin more positively, and that rising sentiment was supported by the TSLA news.”
If Tesla’s example does indeed spark a rush of big corporate followers, the future of money could come even sooner than expected. On the flip side, the crypto market may still be too volatile and unpredictable for some of the old firms to step in. As such, it might be a gradual entry rather than a one-day revolution.