Bitcoin price closes in on all-time high
The bitcoin price took another massive step forward yesterday peaking at $57,500, just $7,000 short of its April all time high.
What are the factors behind this recent surge in price? Are we about to eclipse the yearly record or is this just another false dawn on the long road to crypto adoption. Lets take a closer look.
‘Institutional Bitcoin Products’
Online data from Digital Asset Fund Flows by CoinSharesshow that in the previous week $225 million of capital had entered ‘institutional Bitcoin products’ bringing the combined Assets Under Management (AUM) of institutional crypto to $66.7 billion, just 5% from the all time high the market witnessed in April this year.
Institutional Products may be described as funds, derivatives or any traditional asset management company which continue to enter the cryptocurrency market in increasing numbers.
Interestingly, as money flowed into Bitcoin nearly $13.5 million flowed out of Ethereum products in the same week reflecting Bitcoin’s current market dominance of 46.9%, it’s highest since mid May.
Bitcoin ETF imminent?
So what has caused the spike in interest in Bitcoin over the last few days?
Many people believe the US securities and Exchange commission is about to give the green light for investment firms to offer their clients Bitcoin Exchange Traded Fund or ETF for short.
An ETF is an investment vehicle which tracks the price of the underlying assets without requiring investors to own the assets themselves. If the SEC gave the green light for investment firms to offer this form of product the market could witness massive investment as customers look for safe and trusted ways for Bitcoin exposure.
Many people believe October could be the month as the four applications the SEC is currently reviewing are based on established, regulated and insured futures contracts offered by the Chicago Mercantile Exchange (CME).
Not all rosy
However, Pantera Capital CEO Dan Morehead isn’t so optimistic pointing out that many historically anticipated events in crypto have often resulted in up to 90% market downturns.
Furthermore, many experts believe that while a Bitcoin ETF would mean investment funds would scramble to buy up ‘real’ Bitcoin, the long term price would be heavily manipulated if a Bitcoin ETF is approved pointing to the price suppression witnessed when gold and silver ETF’s were launched in 2004.
As with governments all over the world policy decision is closely guarded and leaks are rare. However, the intense price action from Bitcoin over the past week suggest institutional investors know that something special is in the air.
Author: Mark Harridge
Mark Harridge first came across Bitcoin and began to use its peer-to-peer payment network in mid to late-2011. He quickly understood that this technology would change the world. Mark is passionate about crypto adoption, from a macro economic and institutional perspective, and the numerous factors that fuel the relentless march towards individual self sovereignty and the decentralised society of the future.