вЂњWhat is going on is increasing the pressure on other institutional investors to come in,вЂќ says Patrick Murck, an expert in digital finance and an affiliate with the Berkman Klein Center at Harvard University.

The market is not mature yet, and as more investors join, the price might rise. Is that really going to happen? Some factors could indeed push the price higher. вЂњAfter every halving, the price usually increases,вЂќ explains Fiorenzo Manganiello, a venture capitalist and a professor of blockchain technologies at Geneva Business School. One consequence of the attendant scarcity is a rise in price. That is an automatic process by which the output of bitcoins produced by miners вЂ“ individuals who run expensive computers to upkeep the currency network and get paid bitcoin rewards вЂ“ every ten minutes was halved starting from May 11, 2020. BitcoinвЂ™s price was bound to rise in 2020, by dint of a sheer technical fact: the so-called вЂњhalveningвЂќ. вЂњNew investors are having to offer prices that make it attractive for older investors to sell,вЂќ the report concludes. When these larger investors sold their bitcoin, they usually charged higher prices. The report also suggests that bigger investors sucked out liquidity from the market, buying bitcoins from traders and keeping them under lock and key вЂ“ 'hodling' them, in crypto-lingo. вЂњRetail investors were either less involved in this rally, or at least have so far kept their bitcoin on exchanges, while large investors increased buying and taking their bitcoin into their own custody,вЂќ the Chainalysis report explains. In December 2020, purchases of bitcoins from exchanges for sums lower than $10,000 fell by 22 per cent, whereas buys for sums over $10,000 and over $1 million вЂ“ more likely to have been carried out by large investors вЂ“ grew by nine per cent and 32 per cent respectively. A report by Chainalysis, a blockchain analytics company that tracks cryptocurrency movements, suggests as much. More interest from institutional investors means two things for bitcoin: the volumes bought are usually higher than when man-of-the-road investors trade and those volumes are more prone to stay put вЂ“ making the supply of circulating bitcoin scarcer, and therefore hiking the price. Bitcoin and crypto are being domesticated and given a new sheen of legitimacy. вЂњJust that forward momentum, I think, to institutional investors, signals that this is here to stay.вЂќ Parallel to that, authorities are coming down hard on anonymous transactions вЂ“ the kind bitcoin was supposed to abet вЂ“ imposing or threatening to impose new know-your-customer rules on exchanges that sell users crypto for state-backed currency like dollars or pounds. вЂњIf you actually abstract away from the substance of the regulation, what is a positive sign regardless, is that regulators are spending time and effort and brainpower on this,вЂќ Sokolin says. In July 2020, the Office of the Comptroller of the Currency (OCC), an independent bureau of the US Treasury in charge of federal banking regulation, announced that all chartered banks could provide вЂњcustody servicesвЂќ, in other words keep their clientsвЂ™ bitcoins safe in their storage devices last week, the OCC also announced that banks would be allowed to partake in a blockchain network вЂ“ the digital infrastructure where cryptocurrencies are exchanged вЂ“ and even settle some payments in digital assets called stablecoins. This comes straight after major fintech companies like PayPal and Robinhood made it easier to purchase bitcoin, and on the heels of a breakneck regulation drive, chiefly in the US. The cryptocurrency that started its existence as an anti-establishment tool to avoid government detection and oil the cogs of dark markets is now being embraced by financiers. Between 20, crypto-focused hedge funds вЂ“ which only invest in digital currencies, bitcoin the foremost among them вЂ“ doubled their assets under management from $1bn to $2bn, according to an analysis by accounting company PwC and financial firm Elwood. Corporates including cloud-based services MicroStrategy, and hallowed insurer MassMutual вЂ“ besides funds such as former star-crossed Trump aide Anthony ScaramucciвЂ™s SkyBridge Capital вЂ“ have all gone big on bitcoin.

More and more, it is the financial bigshots.Д«itcoin is going institutional. While that is hardly scientific evidence, it evinces a real shift: this time it is not inexperienced retail investors вЂ“ your neighbour, your aunt, your running buddy вЂ“ who are buying bitcoin. In 2017 huge numbers of people were desperate to join the bitcoin gold rush. Just look at the Google search data, he says. вЂњThere's a lot less heard-about-it-for-the-first-time mass retail rush to kind of be the first on the edge of something,вЂќ says Lex Sokolin, global fintech co-head of blockchain company Consensys.

Bubble explode