SINGAPORE – Bitcoin’s record rally in recent weeks has been partly driven by the entry of several large institutional investors, according to global cryptocurrency leader PwC Henri Arslanian.
Digital currency rose more than $ 30,000 for the first time on Saturday and advanced by more than 300 percent in 2020, Reuters reported. On Monday afternoon in Asia, Bitcoin traded at about $ 32,668.93, according to CoinDesk.
The cryptocurrency has existed for just over a decade, but began to grow in popularity among major institutional investors last year. Bulls Crypto said bitcoin is seen as a hedge against inflation, similar to gold.
“When you look at this bitcoin rally that we’ve seen in the last few weeks and months, indeed, there are two big elements that drive it. One is the continuous entry of institutional players,” Arslanian said Monday on Street Signs Asia ”on CNBC. “
The resurgence of Bitcoin prices last year was partly fueled by well-known billionaires on Wall Street who publicly support the cryptocurrency. Analysts said their approval gave ordinary investors skepticism. Investors such as Paul Tudor Jones and Stanley Druckenmiller have put money into bitcoin and highlighted its potential as a hedge for inflation.
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Large financial companies such as PayPal and Fidelity have also made moves in cryptocurrency while Square and MicroStrategy used their own balance sheets to buy bitcoin.
Arslanian said he expects this trend to continue in the coming months, stressing that there are various tools that allow institutional players to be exposed to bitcoin. “But there are also a lot of regulated players. That wasn’t the case a few years ago,” he said.
A second development that has driven the current bitcoin rally is retail investors and their fear of losing, according to Arslanian. He said that many more people today have cryptocurrency accounts than before, because buying cryptocurrencies is easier now than before.
“With these two big elements driving it, there’s a lot of momentum in space. There’s a lot of optimism in the crypto markets as well,” he said.
Bitcoin’s recent performance is reminiscent of its frantic $ 20,000 rally in 2017, which was followed by a sharp pullback in 2018, eliminating billions of dollars in the market capitalization of major cryptocurrencies. But crypto fans say the current rally is different because it is driven by institutional shopping rather than retail speculation.
For his part, Arslanian said that a big difference between this rally and the one seen in 2017 is the clarity of the regulations, which was reduced then. Today, he said, most regulators around the world have people working on internal crypto. Many large financial centers have “fairly good regulatory clarity in the crypto markets and this provides comfort, not only to institutional investors, but also to retail investors coming to market,” he said.
While Arslanian refused to set a target price on bitcoin for this year, he said the current momentum remains optimistic. “More than the price of bitcoin, I’m looking at the number of institutional players coming in, who I think have an oversized impact on the markets,” he added.
– CNBC’s Ryan Browne contributed to this report.