Don’t look now, but the bitcoin price is trading notably close to the psychologically important $10,000 threshold. Not only that, but bitcoin is also the top-performing asset of 2020 so far, having generated returns of more than 26% in the month of January alone. Meanwhile, rival store of value gold has gained a mere 3% in the same period. This comes on the heels of BTC similarly leaving all other asset classes in the dust in 2019, delivering returns of more than 90% last year vs. gold’s 18%. Now with the bitcoin halving event less than four months away, the crypto bulls are out.Source: Thomas Lee/Fundstrat
One of the top strategists to spot the fact that the technical stars are aligning for bitcoin was Fundstrat Co-Founder Thomas Lee. His firm issued a report saying that bitcoin trading above its 200-day moving average means the leading cryptocurrency is “back in a bull trend.” According to Lee, that technical setup happened on Jan. 27, which he describes as a “positive milestone” that reinforces “2020 shaping up to be a great year for BTC.” In other words, the bulls are back in control.Source: Twitter
The bitcoin halving event is planned to kick in about 100 days from now. It’s a milestone that the entire crypto community is anticipating, as it will slash the bitcoin mining reward for completing blocks in half, from 12.5 to 6.25 bitcoins. The bitcoin halving, which most recently took place in 2016, is historically bullish for the BTC price, though there is a debate among crypto traders as to whether or not it has already been priced into the market. Investors will have to wait until May to settle those bets.
Bitcoin’s market cap is currently hovering at $169 billion, surpassing the net worth of billionaires such as Bill Gates and Warren Buffett but trailing the size of tech giants such as Amazon. Bitcoin’s size also pales in comparison to that of the U.S. stock market, which is worth a whopping $30 trillion according to crypto merchant bank Galaxy Digital, which views BTC as an emerging market opportunity:
“Yet, bitcoin still has tremendous room to expand compared to other global markets…Further still, when compared to the size of the gold market ($9T), US stock market ($30T) or all global money ($90T), bitcoin has tremendous upside growth potential.”
Source: Galaxy Digital
Where Are the Institutions?
Meanwhile, as crypto investors stick to their bullish outlooks, there is one group that is noticeably missing from the rally – institutional investors. According to a recent report in The Block, bitcoin derivatives exchange Bakkt is experiencing painfully low trading volume in its options contracts, which it launched in December. For the week of Jan. 20-24, bitcoin options trading volume was a big goose egg (zero). On the bright side, rival derivatives exchange the CME, which introduced BTC options trading this month, is seeing some trading activity in its BTC options contracts, which came in at nearly 60 lots a week ago vs. Bakkt’s zero. Nonetheless, a spokesperson from ICE, which is behind Bakkt, characterized the interest in its BTC futures and options contracts as “strong,” according to The Block.