Do you know what is common between Bitcoin, Omicron, and Russia’s attack on Kazakhstan?
Both have led to a decrease in the value of Bitcoin (BTC). But guess what? This trend does not surprise the investors at all, especially the big ones. On the contrary, many experts believe it is the right time to invest for institutional investors (from large corporations).
You see, retail investors (individual investors who purchase BTC in limited quantity through wallets) have limited buying powers, and they are often unsettled by the dip in the price of cryptocurrencies. On the other hand, big companies with access to a large amount of capital view these dips as an opportunity to buy more and earn profits in the long run. For instance, a company known for its Embedded Analytics platform called MicroStrategy bought 1900 Bitcoins just before the New Year – an investment of nearly US $91 million. It might come as a surprise for retail cryptocurrency buyers, but it is a perfectly normal investment for big institutions.
The Changing Concept of Investment in Cryptocurrency
Are you wondering why the bigger players are so inclined to buy?
To get a clear picture, you need to understand the changing concept of cryptocurrency investment.
In the past, cryptocurrency prices fluctuated without any rhyme or reason. It was because the primary investors were early adopters, mostly small-time retail investors. So, every small piece of news changed the way people speculated and caused the price to shift.
But now, we are seeing big-time investors entering the cryptocurrency market. So, the market is likely to follow similar patterns as that of a share market.
Like in the share market, where there is a bull run and bear run, cryptocurrency also has periods where bulls and bears dominate.
When there is a long bull or bear run** in the cryptocurrency world, the money moves between institutional and retail investors. According to experts, currently, the money is moving from retail investors to institutional investors. And, this is the reason why the prices of various cryptocurrencies are falling.
A Similar Event in the Past
In the early part of December 2021, the Bitcoin price dipped by more than 20% when the Federal Reserve Board (US) stated that it would take away the support from central banks. It was at the same time that Omicron was emerging as a threat.
These two factors combined bring down the Bitcoin price and other cryptocurrencies such as Ethereum.
And, now in January, it has dropped from $49,000 per coin to $41,829.50 (at the time of writing).
This dip can be attributed to the rapid spread of Omicron, the invasion of Russia, and the consequent power shutdown in Kazakhstan, which has hampered the mining of cryptocurrencies.
Do you spot the similarities?
Adoption by Bigtime Investors will Drive BTC Prices in the Future
Big investors view the market in totality. Minor changes and shifts do not move them.
When the Bitcoin price rose from $4,000 to over $60,000 (hitting its highest high at $64,486 on April 14, 2021), it was because of its popularity amongst retail adopters.
But now, we are walking into a new world where institutional adopters are becoming more and more interested in cryptocurrency.
Experts believe that the prices will keep on fluctuating till the rotation to institutional investors is complete. After that, it is predicted by many experts that BTC value can reach as high as $120,000.
Let’s wait and watch if they are right.
**If you don’t know, a bull market is where most investors believe that the stocks will continue to rise. And, in a bear market, the investors’ attitude is more negative. Either way, everyone wants to make money and get rich, but the investments are made differently.