Bitcoin Is Still Retail Bound But Institutions Starting to Move in Thanks to ‘Liquidity Pump’
Bitcoin is having a fantastic week, breaching the psychologically important $10,000 level, hitting a new 2020 high, and now trading above $11,000.
This uptrend has the market turning extremely greedy but is backed by strong volume. As we reported, “real” spot trading volume jumped over $4 billion, which for now has fallen back to $2.3 billion.
While CME bitcoin futures open interest hit a new all-time high, ICE-backed Bakkt registered record volume on Monday only to break into yet another high yesterday. Bakkt shared,
“Talk about momentum! We beat yesterday's record with 11,706 Bakkt Bitcoin Futures traded today – that's over $125MM of bitcoin.”
Second consecutive record session on Bakkt yesterday for #bitcoin futures
Focus on physically settled contracts is interesting pic.twitter.com/QwPf5cyeE0
— skew (@skewdotcom) July 29, 2020
The founder and CEO of Galaxy Digital, Michael Novogratz, said he is beginning to see institutional investors move into bitcoin. Still, unlike investing in gold, they face a learning curve in the relatively new asset class. He said,
“Gold has been around for 3,000 years. It's pretty easy to buy.”
“There's an adoption game in bitcoin that you don't have in Gold. But I like them both.”
For now, “Bitcoin still has a lot of retail interest in it,” he said. A lot of this retail interest had shifted to stocks, especially tech stocks, because they were just more fun, but this week we see “a lot of money shift back over to gold and bitcoin.”
Great Bubbles End with Policy Moves
The largest cryptocurrency is now preparing to break above 2019 high $13,900. According to the billionaire investor, this would happen in the next three months.
By the end of the year, Bitcoin could easily reach $20,000 along with the Gold thanks to the “liquidity pump” by the government, he said. “Great bubbles usually end with policy moves,” the investor told CNBC.
“It doesn't look like the Fed is going to raise rates … The liquidity story isn't going to go away. We're going to get a big stimulus.”
The US Federal Reserve has already pumped in trillions of dollars in the market, and yesterday it extended its emergency lending to the end of this year. This week, US Republican lawmakers also unveiled plans for a $1 trillion stimulus that includes another round of $1,200 direct payments, unemployment benefits, and additional funds for small-business loans.
Crypto exchanges are also seeing a “surge in bitcoin interest as the market anticipates that second stimulus bill,” Catherine Coley, CEO of BinanceUS, told Forbes.
Everyone is waiting for more gains, and bitcoin investors are keeping their BTC off the exchanges in favor of HODL instead of taking off their profits.
#Bitcoin supply on exchanges hasn't budged.
Whales aren't taking profit. Not yet.
Basic knowledge like this is an edge over much of the market.
In the land of the blind, the one eyed man is king.
We go higher.
— Cole Garner (@ColeGarnerBTC) July 28, 2020
The veteran investor is betting big on both digital Gold and yellow metal and says both have room to move higher.
Novogratz has his core positions in bitcoin, Gold, and Silver, which “are working great.” He estimated that about 20% of his net worth is in bitcoin, adding that he wanted to see the digital asset go higher.