After setting an all-time record, bitcoin has undergone a correction. However, its value has increased by 124% over the year and by 32% over the past 30 days. Both companies and some countries are likely investing in bitcoin.
Bitcoin rose to 103.5k USD, setting a new all-time record on December 5. Net inflows to American Bitcoin ETF funds are very high, amounting to 501m USD the day before the record rate.
The rises we have observed for some time, which resulted in a long-awaited effect, were caused by the industry’s optimism that President Donald Trump will curb strict government control, which was prevalent in his predecessor’s administration, and will instead pursue a policy friendly to the digital assets industry. Interestingly, the day before the record-breaking day, news broke about an actual change in this respect for the first time. As part of this change, D. Trump appointed blockchain and cryptocurrencies-related Paul Atkins as the new chairman of the SEC, the United States Securities and Exchange Commission.
Cryptocurrencies have been in an upward trend, and the activity of ETF funds signals great investor interest, despite the record “price discovery” trend dominating at ATH. The average purchase price of Bitcoin for short-term holders is 75k USD, so these addresses maintain almost 35% in unrealized gains on average; this implies that we may see a short-term correction without very high inflows into the Bitcoin market.
High volatility in Bitcoin does not deter some investors. On the evening of the record-breaking day, the over-leveraged market led to cascading liquidations resulting in a drop below 100k USD.
Federal Reserve Chairman Jerome Powell addressed Bitcoin at the DealBook summit. Powell compared Bitcoin to digital gold, emphasizing its volatility and speculative nature. Powell also denied that Bitcoin undermines the Federal Reserve or the status of the US dollar. Such comments make an impression on investors.
“Companies investing in Bitcoin have appeared on the market, and their successes are also fueling the imagination of other investors, for example, MicroStratdegy,” says in an interview with MarketNews24, Maksymilian Kuch, stock market analyst at XTB.
MicroStrategy, which is the largest holder of this cryptocurrency, has accumulated Bitcoins worth 17 billion USD. It has become a rising star on the American exchange when it decided to change its strategy in 2020 related to the adoption of Bitcoin into its reserves, leading to almost an 11-fold increase in the course and a capitalization increase to 45 billion USD. The future vision of the company is to serve as a Bitcoin bank, providing loans to other institutions, thanks to having so much capital available in Bitcoin.
“From October 31 to November 10, the company sold shares for 2 billion USD and immediately bought 27,200 bitcoins, a week later MicroStrategy sold 4.6 billion shares, which resulted in it being able to buy 51,780 bitcoins,” adds XTB expert. “Over three weeks, a very large supply of its shares worth 7 billion USD did not cause a reduction in its value, which would be a normal reaction for other companies. On the contrary, from session to session, it managed to increase its share price by 10%.”
Two other companies – Mara, which is involved in “mining” cryptocurrencies, and Galaxy Digital, which offers financial and strategic advice for digital asset sectors, cryptocurrencies, and blockchain technology – are also heavily investing in Bitcoin.
Very unusual investors appeared on the cryptocurrency market. El Salvador was the first country in the world to recognize Bitcoin as a legal tender in mid-2021 when its value was around 36k USD. This move earned the country hundreds of millions of dollars, allowing it to pay off some of its debt.
In the US, the Bitcoin Act document has caused a stir among investors, giving hope that Bitcoin could become part of the US foreign currency reserves, accumulating from 0.5 to 1.0 million Bitcoins.
“If such a player appears in the cryptocurrency market, the purchase price will not matter much to him,” explains M.Kuch from XTB. “It is especially important that as the value of Bitcoin will rise, the US debt will decrease. It is possible that there are already countries about which we don’t know, and they are already doing this, so perhaps soon there will be even more demand for cryptocurrencies and, consequently, further “bullish” signals for Bitcoin. However, if it turns out that the United States will not make such a move, the market may react with very severe and drastic markdowns. This will probably turn out in the third or fourth quarter of next year.”
Source: https://managerplus.pl/etf-y-napedzaja-bitcoina-nowy-rekord-wszechczasow-i-perspektywy-wzrostu-13581
