SINGAPORE – According to PwC’s global crypto leader Henri Arslanian, Bitcoin’s record-breaking rally in recent weeks has been driven in part by the arrival of more large, institutional investors in the market.
The digital currency rallied more than $ 30,000 for the first time on Saturday and was up more than 300% in 2020, Reuters reported. Monday afternoon, Bitcoin in Asia traded around $ 32,668.93, according to CoinDesk.
The cryptocurrency has been around for a little over a decade, but only started to rise in popularity with mainstream institutional investors last year. Crypto bulls have said bitcoin is seen as a hedge against inflation, similar to gold.
“When you look at this bitcoin rally that we’ve seen over the past few weeks and months, there are really two main elements driving it. One is the continued entry of institutional players,” Arslanian said on CNBC’s “Street Signs Asia” Monday. . “
Bitcoin’s price rebound last year was fueled in part by well-known Wall Street billionaires who publicly supported the cryptocurrency. Analysts said their approval gave confidence to otherwise skeptical mainstream investors. Investors like Paul Tudor Jones and Stanley Druckenmiller have both put money into bitcoin and pointed out its potential as an inflation hedge.
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Major financial companies such as PayPal and Fidelity have also moved into the cryptocurrency while Square and MicroStrategy have used their own balances to buy bitcoin.
Arslanian said he expects that trend to continue in the coming months, pointing out that there are now several tools that allow institutional players to be exposed to bitcoin. “But there are also a lot of regulated players. This was not the case a few years ago,” he said.
A second development driving the current bitcoin rally is private investors and their fear of missing out, Arslanian said. He said that many more people now have accounts on crypto exchanges than before as buying cryptocurrencies is now easier than before.
“With these two big elements driving it, there’s a lot of momentum in the space. There’s a lot of optimism in the crypto markets too,” he said.
Bitcoin’s recent performance is reminiscent of its insane rally to nearly $ 20,000 in 2017, which was followed by a sharp drop in 2018, wiping out billions of dollars in market cap of major cryptocurrencies. But crypto fans say the current rally is different as it is driven by institutional purchases rather than retail speculation.
For his part, Arslanian said a big difference between this rally and that of 2017 is the regulatory clarity, which was scarce at the time. Today, he said, most regulators around the world have people working on crypto internally. Many of the major financial centers have “fairly good clarity about the regulation of crypto markets, which is comforting not only for institutional investors but also for retail investors entering the market,” he said.
Although Arslanian declined to set a price target on bitcoin for this year, he said the current momentum remains optimistic. “More than the price of bitcoin, I look at the number of new institutional players coming in that I think are having too much of an impact on the markets,” he added.
– CNBC’s Ryan Browne contributed to this report.