A ‚tidal wave‘ of capital is rolling towards Bitcoin: Skybridge Capital
- Bitcoin has seen an extreme rally in the last three months, rising to $28,000.
- Even after a slight correction, BTC is now still trading at $27,800.
- Analysts believe that there will be a tidal wave of capital entering the cryptocurrency space, causing prices to rise even
Bitcoin could see a tidal wave of capital
Bitcoin has gone through an extreme rally in the last three months, rising to $28,000. Even after a slight correction, BTC is now trading for $26,500.
Many attribute this rally to institutional capital. There have been large funds, corporations, Crypto Engine and other firms in this class buying cryptocurrencies to diversify their portfolios.
For example, MicroStrategy, a business services firm that bought $650 million worth of bitcoin. The company writes of the purchase:
„TYSONS CORNER, Va.-(BUSINESS WIRE)-Dec. 21, 2020- MicroStrategy® Incorporated (Nasdaq: MSTR) (the „Company“), the largest independent, publicly traded business intelligence company, today announced that it has purchased an additional approximately 29,646 Bitcoins for approximately $650.0 million in cash, at an average price of approximately $21,925 per Bitcoin, including fees and expenses.“
According to a slide deck from Skybridge Capital shared by bitcoin investor Hanson Birringer, the investment fund is expecting a tidal wave of institutional capital to rush into the bitcoin space.
The slide deck shows that the firm’s investors believe bitcoin will mature as an asset class. The slide deck specifically cites the entry of pension funds, RIAs, hedge funds and other institutional investors.
Retail demand also skyrockets
Retail investor demand for bitcoin is also skyrocketing.
Dan Morehead, CEO of Pantera Capital, recently found that the amount of Bitcoin being purchased by PayPal users is skyrocketing, accounting for more BTC than is mined each day:
„When @PayPal went live, the volume started to explode. The surge in itBit volume means that within two months of launch, PayPal is already buying more than 100% of the new supply of Bitcoins… In the last seven months, there have been two big shifts – one in demand, one in supply – both upwards. On the demand side, public companies like PayPal have entered the market. That shifts the demand curve significantly upwards. At the same time, the supply of newly issued BTC was halved in May – as part of the halving of bitcoin issuance that takes place every four years. So there are fewer BTC available. We titled our last investor letter „Bitcoin shortage“. The price is behaving as if there is a shortage.“
This spike in demand for bitcoin could lead to a shortage over time that will drive the price above $100,000 and beyond, according to analysis.