As much as we want to romanticize the recent spike in Bitcoin by crediting the retail traders at home hunkering down for a second wave, I’d be remiss not to acknowledge it’s really just bigwig hedge funds making up for lost time. Sure, you might be scaling into a Bitcoin position from the comfort of your home right now, but the Machiavellian institutional suits have been throwing massive capital at both the underlying cryptocurrency and these blooming crypto-ETF’s for the better part of 2020. Thats what differentiates this years rally from the 2019 run-up; Wall St v.s. Main St.
Several companies have listed Bitcoin-tracking ETPs, which are regulated investment vehicles that mimic exchange-traded funds. So hedge funds that want a piece of the crypto action can legally invest in ETP’s on the stock exchanges. Since 2017, Bitcoin has been progressively building its case as a legitimate asset class and a credible alternative to gold, with backing from corporate mammoths like PayPal & Square [PayPal & Square Are The New Wall Street Banks]. For instance, a Bitcoin exchange managed by Swiss issuer, 21Shares, has seen inflows swell to $3 million a day in 2020, compared to last November when it took the entire month to net $3 million.
Over the past month, inflows into US-listed vehicles such as the Grayscale Bitcoin Trust [$GBTC] show that “the institutional demand is so strong that even if some hedge funds or other funds that play bitcoin as a momentum trade get out, it’s not enough to stop the price ascent.”
According to the Nasdaq, Grayscale Bitcoin Trust’s share price value on Wall Street at the start of October was $10.87. As of November 20, it has almost doubled to $19.94 and doesn’t look finished. Especially with firms like Microstrategy announcing in September it bought $250 million worth of Bitcoin, and Mr. Dorsey’s Square revealed a cool $50 million investment of their own. This is just a byproduct of what whale money will do to an innocent pajama trader’s speculation.