Cryptocurrency Analysis

[IFX_Selena]

BITCOIN. BTC rally driven by institutional investors. US inflation forces investors to seek high-yield instruments.



Over the last trading day, bitcoin has advanced by $3,100. Today, it has added another $1,100. Thus, it can be said that the price is moving in an uptrend, although we believe that there are signs of the waning upside momentum. In the meantime, many wondered what triggered a new round of gains in the world's biggest cryptocurrency's price. According to crypto experts, this is due to large institutional investors. Apparently, they continued to invest in bitcoin, which led to a new surge in its value. Small traders are now hardly ready to invest in bitcoin as it is too expensive. Moreover, there are ether, litecoin, and other cryptocurrencies that are much cheaper and are just gaining popularity. That is, demand for altcoins has been actively growing lately. In previous articles, we paid attention to the fact that the bitcoin dominance index is declining. Thus, experts recalled that on April 8, Liberty Mutual and Starr Insurance invested about $100 million in New York Digital Investment Group. Earlier, other major banks and companies also invested in that platform. On April 9, US asset management company Millennium invested in bitcoin through Grayscale Bitcoin Trust. Thus, institutional investors increased the demand for bitcoin again. As a result, the number one cryptocurrency gained in value. From our point of view, this is an important factor. When BTC was standing still during several weeks, we noted that an influx of new investors was vital for the cryptocurrency. Thus, new investors appeared, dragging the quote to new highs. Thus, if this influx of investors does not stop, bitcoin may well rise to $100,000 or even $1 million. The only question is how long this will go on.

In our opinion, yesterday's US inflation report helped bitcoin continue its rally. Given that inflation accelerated in March, a growing number of investors is expected to focus on risky assets in order to preserve their capital. Government bonds offer too low yields. As for stocks, the situation in most cases is the same, although investors can at least count on an increase in the value of shares themselves. True, despite the stable growth of key US stock indices, many experts believe that a stock market bubble has long been formed. The main reason for it is huge amounts that have been pumped into the American economy over the past year by the government and the Fed. As a result, this money migrated to the stock and cryptocurrency markets (not all, of course). Thus, the global crisis and the measures of the government and the Federal Reserve to save the US economy led to the fact that large companies became even more expensive, and bitcoin rose in price from $4,000 to $63,000. Investors fear not only high inflation but also its further acceleration in the coming months. After all, Jerome Powell has already made it clear that the Fed is not going to phase out its quantitative stimulus program as well as raise interest rates. This means that inflation will continue to rise. Thus, this factor could further raise demand for cryptocurrencies.





Paolo Greco
Analytical expert
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