Bitcoin At an All-Time High Outperforming All Asset Classes, Why are investors Gung-ho? - Kalkine Media

December 01, 2020 06:18 PM AEDT | By Kunal Sawhney
Follow us on Google News:

Bitcoin prices finally climbed to a record high, taking less than three years to scale the previous all-time high the previous high seen in December 2017. The world’s most popular cryptocurrency gained considerable momentum in the recent past, reaching USD 19,857.03 mark, taking the YTD returns of the digital asset to 177 per cent (as on 30 November 2020), outperforming all asset classes.

Image Source: © Kalkine Group 2020

The Motif

  • Large Institutional Buying

One of the primary reason behind the Bitcoin rally is the prevailing uncertainty, and the low interest-rate environment, which coupled with the indication of negative interest rate scenario from several central banks across the globe, is prompting the market and institutions to look for alternative ways to preserve capital.

Image Source: © Kalkine Group 2020

The money flow from large institutional investors could be inferred from the formation of whale clusters around the upper level, which is further reflecting on large accumulation. Also, the number of unspent coins, along with large buying, is also indicating the same.

To Know More, Do Read: Bitcoin Reclaims USD 19,000 After Three Years, What’s Driving the Rally?

  • Opportunity To Generate Additional Alpha

Apart from a large institutional buying and the investor participation in the rally, the emerging opportunity in the cryptospace to generate an additional alpha through DeFi-based application tokens is also making the digital safe-haven more appealing to investors.

One of the most prominent strategies around the concept of Decentralised Finance (DeFi) which has gained steam in the recent past is the liquidity farming, which could be defined as a strategy to generate additional return on cryptocurrencies by utilising the Bitcoin or any other cryptocurrency on DeFi-based lending platform such as Compound.

Furthermore, while the demand side for the digital gold, i.e., Bitcoin, is strong for several reasons, the supply side is anticipated to squeeze as more Bitcoin mining has an impact.

  • Narrowing Supply

As most of the investors are now familiar that a Bitcoin is generated on solving a mining block of the blockchain, and since the last halving day on 11 May 2020, the reward for mining per block has been reduced to 6.25 BTCs as compared to its initial reward of 25 BTCs.

Also, as Bitcoin prices are showing strong momentum, the Bitcoin mining process, which is measured in terms of computational power required to solve a mining block, is anticipated to increase further.

The increased mining process over the price rally further holds the potential to squeeze the supply chain ahead while making it more difficult to generate a Bitcoin.

The above-mentioned are one of the most influencing factors in the cryptospace, which is further fuelling the demand for the currency of mayhem.

Image Source: © Kalkine Group 2020


The content, including but not limited to any articles, news, quotes, information, data, text, reports, ratings, opinions, images, photos, graphics, graphs, charts, animations and video (Content) is a service of Kalkine Media Pty Ltd (Kalkine Media, we or us), ACN 629 651 672 and is available for personal and non-commercial use only. The principal purpose of the Content is to educate and inform. The Content does not contain or imply any recommendation or opinion intended to influence your financial decisions and must not be relied upon by you as such. Some of the Content on this website may be sponsored/non-sponsored, as applicable, but is NOT a solicitation or recommendation to buy, sell or hold the stocks of the company(s) or engage in any investment activity under discussion. Kalkine Media is neither licensed nor qualified to provide investment advice through this platform. Users should make their own enquiries about any investments and Kalkine Media strongly suggests the users to seek advice from a financial adviser, stockbroker or other professional (including taxation and legal advice), as necessary. Kalkine Media hereby disclaims any and all the liabilities to any user for any direct, indirect, implied, punitive, special, incidental or other consequential damages arising from any use of the Content on this website, which is provided without warranties. The views expressed in the Content by the guests, if any, are their own and do not necessarily represent the views or opinions of Kalkine Media. Some of the images/music that may be used on this website are copyright to their respective owner(s). Kalkine Media does not claim ownership of any of the pictures displayed/music used on this website unless stated otherwise. The images/music that may be used on this website are taken from various sources on the internet, including paid subscriptions or are believed to be in public domain. We have used reasonable efforts to accredit the source wherever it was indicated as or found to be necessary.

Top ASX Listed Companies

We use cookies to ensure that we give you the best experience on our website. If you continue to use this site we will assume that you are happy with it. OK