The global events seen throughout 2020 have largely altered Bitcoin’s underlying market dynamic, causing the cryptocurrency to see a massive rise in institutional involvement. Many of these institutional investors have been moving to gain exposure to BTC via its CME futures, which has seen a massive rise in open interest throughout the past several days and weeks. It now appears that the cryptocurrency is also seeing a massive rise in the number of smaller retail investors that have been accumulating in recent times. This accumulation is emblematic of the fact that the number of BTC wallet addresses holding over 0.1 BTC has risen significantly over the past year. Bitcoin Sees Heightened Retail Accumulation Bitcoin has been performing quite well despite the turbulence seen within the traditional markets. Although smaller markets typically perform quite poorly during periods of widespread weakness, it does appear that BTC’s positive performance has been emblematic of its growing position as a safe haven asset. This narrative has been perpetuated by comments from legendary macro investor Paul Tudor Jones, who explained that the benchmark cryptocurrency reminds him of gold in the 1970s and that it will be the big winner of imminent inflation caused by widespread money printing. Smaller investors have taken notice as well, as data shows that the number of wallets containing at least 0.1 BTC has been growing significantly in recent times. Rafael Schultze-Kraft – the co-founder of blockchain research platform Glassnode – spoke about this trend in a recent tweet, noting that there are now 14% more addresses with over 0.1 BTC than there was just one year ago. “There are now more than 3 million Bitcoin addresses holding at least 0.1 BTC (current value: $975 USD). That’s 14% more addresses than one year ago today. Image Courtesy of Glassnode Retail Investors Aren’t the Only Ones Accumulating BTC It is important to note that multiple parties are currently engaged in accumulating Bitcoin. In addition to smaller retail investors, large Bitcoin investors have also been purchasing BTC at a rapid rate. Glassnode data also elucidates this trend, showing that there has been a “continued increase in the number of BTC whales” throughout the past couple of months. Traditional investors have also grown increasingly interested in the nascent market. Data from analytics platform Skew shows that CME’s Bitcoin futures have seen rapidly climbing open interest in recent times. Currently, open interest for BTC futures on the CME sits at nearly $600 million. Its trading volume, however, typically hovers below $500 million. Image Courtesy of Skew The difference between the two marks the positions being held by non-active institutional investors who are looking for long-term exposure to BTC. Because Bitcoin is seeing accumulation from multiple important components of its investor base, it is highly likely that this wide-spread accumulation will help provide the cryptocurrency with greater upside in the weeks ahead. Featured image from Unsplash.
Leading global blockchain news provider. A blockchain, originally block chain, is a growing list of records, called blocks, that are linked using cryptography.