Bitcoin Price Hits New Record as Crypto Market Matures

The price of Bitcoin officially hit a new all-time high on December 1 above $19,892 after nearly three years.

Despite the collapse of Thanksgiving last week, the price of BTC managed to rebound over the weekend. BTC then easily surpassed the $19,000 mark on Monday to hit its all-time high. 

Three key trends drove BTC’s rise from under $3,600 in March to over $19,892. These include increased institutional demand, lower selling pressure, and resistance from BTC throughout 2020.

Data suggests institutional demand fueled the rally

Most of the on-chain data points show that the demand for Bitcoin by institutions has increased rapidly.

In November, Grayscale posted record net income, and CME’s Bitcoin futures market saw its open interest rise close to $1 billion.

Grayscale, in particular, said that more institutions invested in cryptocurrencies during the third quarter of 2020 than ever before.

The figures that Grayscale sees are essential in measuring institutional interest in Bitcoin because Grayscale Bitcoin Trust is usually the first entry point for most institutions to gain exposure to BTC.

In the United States, there is no exchange-traded fund for BTC and other major cryptocurrencies. Therefore, Grayscale Bitcoin Trust is the closest investment vehicle to an ETF in the US market. The company report stated that more institutions invested in 3Q20 than ever before. They increased their average allocation from $2.2 million in 3Q19 to $2.9 million in 3Q20. Institutions comfortable with multiple products within the Grayscale suite averaged nearly double investor commitments for a single product during 3Q20.

Bitcoin’s resilience has been a major factor

In August, MicroStrategy bought $450 million worth of BTC, adopting Bitcoin as its main treasury asset. This was probably the spark that unleashed the current wave of institutional demand for the digital store of value.

This was accompanied throughout the summer by high-profile assignments to Bitcoin from the likes of Paul Tudor Jones and later Stanley Druckenmiller, which only further fueled positive market sentiment.

In November, Druckenmiller explained that Bitcoin is likely to stick around, as it has significantly outperformed gold in 2020. He said that Bitcoin has existed for 13 years, and with each passing day, it regains its stabilization as a brand.

Low selling pressure on BTC helped sustain its rally throughout the month, ultimately allowing the dominant cryptocurrency to hit a record high.

On June 13, JPMorgan said in a note that Bitcoin’s recovery from the March crash showed its power to stay. The recognition of Bitcoin’s resilience by the largest investment bank in the US likely acted as a significant confidence boost, especially for institutional investors.