Archives September 2021

Three Ways This Bitcoin Bull Run Is Different Than Late 2020

Bitcoin is the only cryptocurrency that has received great interest from institutional investors. In 2021, Bitcoin’s value experienced a decline because of multiple reasons. The value of bitcoin is being compared to its value in 2020, but there are many differences that show that the interest of people in buying and investing in bitcoin has declined. Research’s director, Pete Humiston, has said that there is a huge difference observed in Q3 2021 and Q4 2020 in Bitcoin.

GBTC uphold its sturdy concession

Instead of the value of bitcoin increasing from $29,000 to $45,000, bitcoin is observed not to attract investors. Though bitcoin’s value skyrocketed previously and high price levels have really enjoyed the attraction and support of investors, clear evidence can be seen between the difference in demand of bitcoin in the previous year and the start of 2021.

For instance, the Grayscale Bitcoin Trust that was quite popular till the end of last year has now continued to trade at a decline of 13% in its price as compared to the previous week. Even after bitcoin’s price skyrocketed, GBTC’s demand has not increased at a fast pace. But at the same time, the decline in GBTC isn’t considered theft by retail and institutional investors.

Humiston added that “There has been a 20% discount set on GBTC in May 2021, but it is still trading at a sturdy concession. If demand increases, which seems impossible at this time, it would be best if the discount decreases and the participants start to take it as an opportunity to own GBTC.

Rates of Funding are lower when compared to the performance of Bitcoin’s value.

There are multiple factors that differentiate the structure of the bitcoin market, including low funding rates and low open interest. Both the factors compare with the Bull Run of 2020 and go against everything, resulting in an increase in the price of bitcoin in the past month. In the meantime, it has been seen that the price of bitcoin has moved from $30,000 to around $48,000 and the open interest has decreased, and the funding rate is also low.

Humiston said that “The massive increase in the price of bitcoin comes as a shock, and investors get the surprise of an increase in price which isn’t normal”. After the price crash of Bitcoin in May 2021, the funding rates are known to increase.