There are many analysts going back and forth and discussing the bull runs that bitcoin has incurred during both 2017 and 2020. It is widely estimated that the entire financial space was more of an observer three years ago, watching bitcoin move and wondering what to make of it all.
Bitcoin Is Being Pushed By Institutions
However, as time has gone by, it looks like the currency has really solidified its reputation as an asset to be taken seriously. Many people are now looking at bitcoin as something that must be part of one’s portfolio, and the financial industry is serving more as a player than as an observer this time around.
This could potentially be contributing to the present bull run, which is powered by FOMO (fear of missing out) not from retailers, but from legitimate businesses who want to solidify their statuses as financial strongholds.
We’re now entering a period where there is a lot less risk associated with cryptocurrency. Many more exchanges have become regulated in the past year, while family offices such as MicroStrategy have shown that they’re willing to take a gamble and invest in BTC even though it may not be as established as gold or standard stock shares. Henri Arslanian – an executive with the PwC in Hong Kong – stated in a recent interview:
The multitude of regulated crypto exchanges and custodians has eliminated the ‘career risk’ for institutional investors. In 2017, there was retail FOMO. The question is whether we will see institutional FOMO in 2021.
One of the big contributing factors when it comes to pushing the bitcoin agenda is the COVID pandemic. Many people now see the asset as a serious contender to replace gold. It is now a tool – in many trader’s minds – that can be used to hedge one’s wealth and diversify their assets. Michael Sonnenshein – managing director of Grayscale Investments in New York – mentions:
Institutional investors are keen on portfolio construction in the wake of COVID, and the ways they need to reposition themselves given how governments have injected stimulus into the system.
The constant talk of stimulus checks being issued – and the checks that were handed out earlier in the year – has also got a lot of people worried about what could potentially happen to financial markets. Many people are now playing witness to the fall of the U.S. dollar and other forms of fiat. Constant stimulus measures have required excessive printing, which is ultimately putting a dent in the world of traditional finance.
Everyone Wants a Piece of the Pie
Arslanian says that the attitude is changing, and everyone is now much more interested in crypto than they are in anything standard. He says:
The question investors will ask fund managers will gradually switch from ‘why did you invest in crypto?’ to ‘why have you not yet invested in crypto?’