We’re finally seeing positive price action in crypto markets. As I write this, bitcoin is trading around $3,954. Ethereum is at $145, and litecoin is at $51.
We may not be out of the woods yet, but things are certainly improving.
Let’s take a look at the recent move up in bitcoin. Here’s a chart of the past month’s price (teal line). As you can see, most of the move happened in two short bursts of buying.
The mirrored trading volume spikes are also noteworthy (bottom of the chart in gray). Bullish moves that happen on strong volume are far more likely to continue.
We can’t say exactly what caused these spikes, but a few possibilities come to mind.
It certainly could be more early institutional investors coming into the market. We know that Fidelity has been “onboarding” select clients onto its new crypto platform (which it plans to roll out to the public in March). So this could be new professional money coming into the market.
I expect Fidelity Digital Assets to have a significant impact on crypto markets once it is fully open for business, which should be quite soon. We’re talking about one of the largest investment firms on the planet, managing $7.2 trillion in assets. In the near future, it’ll be offering some of its biggest clients the opportunity to diversify into digital assets.
So on the infrastructure front, crypto is making incredible progress. The next bull market will be the first one where institutional investors can participate in a regulated and safe fashion.
Importantly, we’re also seeing real progress being made on scalability. Bitcoin’s Lightning Network is growing and making rapid technical advances. And Blockstream’s Liquid product, which makes bitcoin transactions fast and nearly free between trusted parties, has signed up 23 large crypto institutions, including major exchanges Bitfinex, OKEx and BitMEX.
Meanwhile, the fundamental case for cryptocurrency is only getting stronger. Governments and central banks around the world are losing the trust of their citizens as they run huge deficits, print money and grossly distort markets. Time is on crypto’s side.
Good investing,
Adam Sharp
Co-Founder, First Stage Investor