While 55% of the interviewed investors expressed an interest in Bitcoin, nearly half of the participants also agreed that cryptocurrencies will be regarded as mainstream mediums of exchange by the end of the decade
Bitcoin reached another milestone in 2020 by rallying above $18,000 for the first time in three years. As traders attempt to secure a new all-time high, institutional investors continue to turn towards Bitcoin amid the chaos in the global market due to the COVID-19 pandemic.
Data from crypto derivatives markets show that though both institutional and retail investors have been keen to accumulate Bitcoin, it is the institutional investors that are behind driving Bitcoin volumes to new highs.
Research conducted by Grayscale Investments, a digital asset management company that currently holds over $9.8 billion in assets under management, suggests that the pandemic may be a primary driver of Bitcoin’s price rally. The company’s annual survey further revealed that 83% of all Bitcoin investors started investing in the past year.
38% of all current Bitcoin investors among the interviewed joined the Bitcoin bandwagon in the last four months and 63% of them believe that the economic crisis caused by the pandemic positively influenced their decision to purchase Bitcoin.
The research further sheds light on Bitcoin’s progress as a mainstream investment tool among the general public and the investor class. 55% of the interviewed investors this year expressed an interest in buying Bitcoin, a significant rise from last year’s 36%.
Nearly half of the participants agreed that cryptocurrencies including Bitcoin will be regarded as mainstream mediums of exchange by the end of the decade. The general trend of investors being attracted to Bitcoin’s store-of-value narrative is significant to the proposal that mainstream adoption can arrive sooner than most experts have predicted.
While experts have had opposing views on how Bitcoin’s price may react to the eradication of COVID-19, Jonathan Hobbs, the author of The Crypto Portfolio and a former digital asset fund manager argues that the effects of the pandemic will continue to affect markets long after the disease has been controlled.
“Covid-19 was the match that lit the flame for institutional adoption. When the world is finally cured of Covid-19, the economy will still be sick with debt. And central banks will continue to print money to try and inflate away those debts as they have done since the 2008 financial crisis. This means the institutional narrative of bitcoin being an inflation hedge is likely to continue long after the pandemic is over”, he explained.
While the massive economic stimulus and the monetary policy adopted by countries as a result of the pandemic has considerably altered the economic landscape, Bitcoin’s ability to gain value when there is volatility in traditional markets and its low entry barrier are key factors that may contribute to accelerating investors’ interests even after the pandemic.
Written by Harshini Nag