In retrospect, February can be seen as a turning point in Bitcoin’s history. Market specialists and economists looked back on the month as a whole as the markets rose sharply before correcting themselves later in the month.
The flagship of the cryptocurrency, Bitcoin (BTC), hit its all-time high of $ 58,352 on Feb.21, eventually surpassing the $ 1 trillion mark in market cap. On the same day, the second most important asset in space, ether (ETH), hit its all-time high of $ 2,033.08.
In February, the price of Bitcoin was something of a roller coaster ride that almost drew a kind of bell curve. BTC started the month at $ 32,889 and gradually rose to an all-time high of $ 58,352 on February 21, before the flash plummeted to around $ 43,700 towards the end of the month.
What is behind this meteoric rise and subsequent retreat that is now causing many in the community to wonder whether the crypto bull run is still going on?
“The weeks in which decades have passed”
At Bitcoin, institutional participation in the asset has increased since late 2020. In February one of the oldest banks in the world, BNY Mellon, entered the crypto industry as a custodian. Given the size and legacy of such banking institutions, it says a lot about where Bitcoin has come to its maturity from the classic car perspective of the likes of Warren Buffet, who labeled the asset a worthless “sham” and even “rat poison” at im Square, ”which indicates how strong his stance on Bitcoin is.
In fact, such perspectives can change frequently. The last naysayer to become an investor is Kevin O’Leary, the Shark tank Star, who will now allocate 3% of his portfolio to Bitcoin. He also implied that every company he invests in is considering adding Bitcoin to its balance sheet. In the past he has called cryptocurrencies a “crypto trap” and the value of Bitcoin as a “giant-nothing burger”.
On these changing perspectives, Shane Ai, who is responsible for product research and development of cryptocurrency derivatives at Bybit – a cryptocurrency derivatives exchange – told Cointelegraph:
“There was a slew of bullish news in February, from Tesla, MicroStrategy, Square and BlackRock putting BTC on their balance sheets, to BNY Mellon, Deutsche Bank and Mastercard Bitcoin. The bitcoin rally to $ 58,352 was a proportional response to the weeks that have passed decades. “
In addition to BNY Mellon and Deutsche Bank, top investment banks such as Goldman Sachs and Citigroup have recently commented on Bitcoin. Goldman Sachs announced that it would restart its cryptocurrency counter, which it closed in December 2017. Veteran trader Peter Brandt took to Twitter to claim that “it’s time to protect your money” when Goldman Sachs enters a niche market.
A Citigroup report said Bitcoin is currently at its “turning point” of either becoming the currency of choice for international trade or seeing a “speculative implosion”. The report says that Tesla and MasterCard’s involvement is proving to be the beginning of a mainstream transformation.
Among the various institutions pouring into the cryptocurrency markets now, Tesla is probably the best known and the one that has shaped the paradigm shift the most due to the influence of its CEO Elon Musk on the crypto markets.
Now its impact on the markets is often referred to as the “musk effect”. On February 8, Tesla announced the purchase of $ 1.5 billion worth of Bitcoin as a treasury asset on its balance sheet. As a result of this move, the price of Bitcoin skyrocketed, seeing a price increase of $ 10,000 in a week. Just two weeks later, on February 21, Bitcoin hit its all-time high.
In addition to the obvious institutional interest, deficiencies and uncertainties in the global economy and traditional financial markets also seem to be spilling over into Bitcoin markets. Ai continued, “Bitcoin is a highly reflective asset – the profitability of a company’s reserve asset increases along with its market capitalization.” He added, “In a world where returns are lacking, financial institutions naturally converge on crypto – which still offers superior, liquid returns when compared to traditional finance.”
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Evidence that the recent wealth movement in the cryptocurrency markets is institutional is provided by analyzing The TIE’s proprietary NVTweet ratio, which compares a cryptocurrency’s social talk to its market cap. The ratio indicates how many tweets a given coin has per $ 1 million market capitalization.
A rapidly increasing NVTweet rate suggests that the market for a particular coin is institutionally driven. If a coin’s market cap is growing faster than its social volume, it may indicate that retailers are less involved in the market for a given coin. When observing the NVTweet Ratio when the price of Bitcoin crosses key support levels such as $ 20,000 and $ 40,000, it is evident that the ratio is increasing rapidly, indicating disproportionately lower social interest despite an aggressively increasing market cap.
Private investors are also getting involved
As a by-product of increasing institutional involvement, millions of new private investors have also been lured into the cryptocurrency markets due to the profits offered in recent schedules and the associated hype.
Joshua Frank, CEO of The TIE, pointed out further evidence to Cointelegraph: “From a retail perspective, we’ve seen Bitcoin’s tweet volume continue to grow for the longest period we’ve seen.”
This steady spike in the volume of tweet related to Bitcoin is largely due to all of the major events Bitcoin saw in February, such as the all-time high and market cap topping the $ 1 trillion mark.
Cointelegraph discussed with Marie Tatibouet, Marketing Director of Cryptocurrency Exchange Gate.io, whether this is the right moment for retail investors to get into Bitcoin, even though prices are much higher than they were a year ago. She means:
“It’s the best time possible as this bull run is unprecedented because of the parties involved. […] These investors are not going to let BTC go through catastrophic slumps. Also, keep in mind that we are not only at the early stages of overall adoption, but also at the early stage of this bull cycle. “
Despite the fact that prices may appear high, retail investors don’t seem to be deterred at all. In Robinhood’s latest report, “Crypto Goes Mainstream,” the company revealed that over 6 million new Crypto users have registered on its platform. January had more than 3 million new users while February had more than 2.9 million new users on February 25th. This is a significant increase compared to 2020 when Robinhood only had an average of 200,000 new monthly crypto traders.
The report also noted that the average transaction size on the platform is $ 500 in 2021, a 100% increase compared to the first three quarters of 2020. Tatibouet went on to say that Bitcoin is seen as a lucrative investment offer for private investors due to its impressive growth in the past year: “Bitcoin has clearly outperformed every single asset class. At one point, it outperformed the Nasdaq 100 by 300% and the S&P 500 by nearly 1600%. “
While Bitcoin saw its first price break above the $ 40,000 mark in January, February proved to be the month when most of the groundbreaking news was released, leading the price of Bitcoin to its all-time high. If Bitcoin avoids a major price correction like it did almost a year ago on March 12, 2020, BTC could have its most impressive quarter in recent history.