After three years of selling, bitcoin finally hit a new all time high above $20,000. Here’s what happened.
Bitcoin briefly broke its all-time high of $19,783.
The previous all-time high was set during the famous 2017 bull run.
Today’s all-time high was preceded by a plethora of institutional investments and bitcoin exaltation.
Bitcoin has broken its all time high of $19,783, beating its previous record set in 2017 at the height of the bull run. Since then, the cryptocurrency has retreated to $19,200 and is increasingly volatile, with price fluctuating by hundreds of dollars in mere minutes.
While Bitcoin’s price is up over 170% since the start of 2020, this bull run truly gain widespread attention in August, when a series of high profile investors —kickstarted by business intelligence firm MicroStrategy— propelled the cryptocurrency to record-breaking heights.
Indeed, institutional interest has played a major role for bitcoin as billionaires line up to keep their wealth safe from inflationary forces. The figures support this idea quite nicely. In fact, since Microstrategy began investing in bitcoin, a number of key indicators have helped bitcoin to push the envelope to glimpse the next paradigm.
Between January 1 and August 10, Bitcoin’s price surged from $7,182 to $11,850, posting a 65% markup over 10 months.
Since August 11—the date of MicroStrategy’s first bitcoin purchase — the cryptocurrency pushed another 65% on top of that, this time on its way to breaking its previous high of $19,665. The increase only took three and a half months the second time.
During that same time-frame, bitcoin’s market cap increased by 64% from $216 billion to $356 billion, beating JP Morgan’s valuation by several billions.
The cryptocurrency’s trading volume has also doubled since August, increasing from $23 billion to $48 billion, indicating that Bitcoin has captured the interest of the market since its bull run began.
But what role have big investors played in bitcoin’s success?
Institutional investment into bitcoin started when MicroStrategy not-so-subtly dumped $250 million in the cryptocurrency on August 11, 2020. On September 8, 2020, that figure was pushed to $425 million.
On October 8, 2020, jack Dorsey’s Square quickly followed suit, investing $50 million—1% of the company’s total assets—in Bitcoin.
Looking to join the party, PayPal also joined the game, entering the arena shortly after.
On October 21, the payments giant announced it would be offering payment support for Bitcoin and other cryptos. Fast forward to November 21st, and PayPal reportedly bought about 70% of the bitcoin that had been mined in the 30 days prior.
Impressive as they may be, these figures do not give the full picture.
These institutions also went all-out on bitcoin, fully embracing the digital scarcity narrative while religiously exalting the cryptocurrency.
“Bitcoin is digital gold – harder, stronger, faster, and smarter than any money that has preceded it,” MicroStrategy said in a statement announcing its first bitcoin investment.
Fast forward to November 9th, and Stanley Druckenmiller – who managed George Soros’ money in the 1990s – publicly said that bitcoin was better than gold.
“It could be an asset class that has a lot of attraction as a store of value to both Millennials and to the new West Coast money—and as you know they’ve got a lot of it,” Druckenmiller said on CNBC.
Just last week, BlackRock CIO, Rick Rieder, also praised bitcoin’s ability to replace gold.
He said: “Do I think it’s a durable mechanism, do I think it will take the place of gold to a large extent? Yeah, I do, because it’s so much more functional than passing a bar of gold around.”
The question on everyone’s mind now is: where will bitcoin be in the weeks to come?
Of course, this is subject to a lot of projections and discussion, but the general expectation among many crypto industry veterans is that bitcoin will be trading at an order of magnitude higher by 2021.
On a longer time-frame, PlanB’s S2F model calls for a $244,000 bitcoin by 2024.