Bitcoin prices have soared to new heights in recent times, and the basic dynamics of tighter supply and higher demand have supported that rise, according to a report prepared by London-based crypto custodian Copper.co.
Copper claimed that the recent price increase is a function of the steadily increasing demand for bitcoins BTCUSD,
and the growing scarcity of the asset with a maximum inventory of 21 million, expected to be hit by 2140. The researcher also said that most of the interest in new bitcoins has come from North America, and the US in particular.
According to CoinMarketCap.com, approximately 18,625 million bitcoins were created or mined digitally, according to CoinMarketCap.com, but a large portion of that has been lost, the folks at Copper wrote.
According to their estimates, 56% of bitcoins are in the hands of investors, 18% are lost, 15% are in the hands of so-called traders, and the rest has yet to be mined (see attached chart):
via Copper.co
Copper said that because the majority of investors are long-term owners, representing eight out of ten holders of the cryptocurrency, the rising appetite for the world’s most popular digital assets could have an inordinate effect on values.
The researchers said bitcoin’s rise above $ 40,000 was already in play even before Tesla Inc. TSLA,
filed his surprise application with regulators on Monday, explaining his $ 1.5 billion investment in bitcoin, and his decision to ultimately allow customers to purchase his products with bitcoin.
“Data shows that new investors have pushed prices much higher in the US
last six months of 2020, to acquire north of 2 [million] bitcoins ”, the Copper researchers wrote in the study.
“To be able to buy bitcoin in such large quantities, the price rose
well above $ 20,000 which helped convince early investors
to sell their cryptocurrency above the previous record level, ”they said.
The crypto market is dependent on a new supply of around 3.2 million bitcoins on exchanges and in the hands of traders, according to the report.
The survey also found that investors who owned at least 1,000 bitcoins for about three months increased their holdings by 173% in 2020.
That surging demand, combined with that limited supply, helped raise bitcoin values to a total market value of about $ 800 billion, and Copper said the main driver of demand is North American buyers taking supply from Asian miners.
“The price increase is the result of a marriage between demand and liquidity
happened in early 2020 when outflows from exchanges, that is,
bitcoins placed in self-custody increased significantly, ”the company’s investigation found.
Koper also made an interesting finding, noting that nearly a third of bitcoin’s trading volume occurs during the period when the New York Stock Exchange is open and investors should focus on trading the Dow Jones Industrial Average DJIA,
and the S&P 500 index SPX,
That so much bitcoin trading takes place during exchange hours, between 9:30 a.m. and 4:00 p.m. Eastern, may explain why S&P 500 moves are sometimes seen as correlated with bitcoin prices, Copper wrote.