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While many enthusiasts and speculators have lamented Bitcoin’s long-trending price drop, a surge of interest from institutional investors has restored confidence in the new technology; pushing bitcoin’s price above $7,000. In reaction to the interest of large-scale investors, the top ten currencies have show gains of four to thirty percent in the last 24 hours.
Bitcoin experienced a difficult June, twice dropping below the $6,000 barrier and setting new all-time lows for the year. For most of 2018, bitcoin has been falling in price much to the dismay of investors. The first week of the new year saw prices rise $3,000 within a few days, before spiraling downwards to just below $7,000. Although there have been some brief upswings in bitcoin’s value, they have been the exception to the otherwise bearish downturn.
According to CoinMarketCap.com the price of Bitcoin grew significantly in 2017. On January 1st the price of BTC was $998, and in December, it reached an all-time high of $19,758: marking a near 1000 percent increase in twelve months. With growth that pronounced, 2018’s 70 percent correction is quite reasonable.
On July 17, 2018 at 10:00 UTC, BTC’s price gained more than $200, marking perhaps the most substantial price increase within the past two weeks. Although the cryptocurrency saw some bullish momentum earlier in June when it’s price peaked at $6,800, significant pullbacks saw any gains from the price increase wiped out.
New Institutional Investors
Two pieces of good news have been the catalyst for this recent price surge. BlackRock Inc, the largest provider of ETF’s in the world, announced that it was considering investing in blockchain and cryptocurrencies. The company’s chief executive Larry Fink announced on Monday that they were cautiously considering moving into cryptocurrencies, as well as mentioning bitcoin by name, according to Reuters.
“We are a big student of blockchain,” he said in an interview with the publication, although he did mention that he didn’t see a “huge demand for cryptocurrencies” among the company’s investor pool. It’s a significant change in tone from Fink’s past interview with Reuters in November 2017, where he said that bitcoin was a “speculative” investment synonymous with money laundering.
“BlackRock exploring crypto assets comes as no surprise and is definitely a positive development for the crypto market,” said Chris Yoo, portfolio manager at for hedge fund Black Square Capital Management. “As the largest asset manager in the world, its interest in crypto assets could be a catalyst for upward price movement and encourage other asset managers, even with more conservative strategies, to seriously explore investing in the crypto space.”
Another positive development was billionaire Steven Cohen’s announcement that he was investing in the cryptocurrency hedge fund start-up Autonomous Partners, founded in 2016 by crypto-advocate Arianna Simpson. Over 70 percent of the 249 crypto funds in existence opened last year, and despite the plunging prices of mainstream tokens, investment managers aren’t deterred from jumping into this space.
Back in January 2018, analysts stated that the entry of mainstream, institutional entities is the next big step in crypto’s evolution from a niche subsector to an integral player in our economy. Historically, big investors have abstained from investing in cryptocurrencies due to regulatory uncertainty, price volatility, and the general skepticism surrounding the industry from mainstream pundits. However, the entry of these two organizations into the market could signify an impending avalanche of institutional money flowing into the system, at least that’s the hope of speculators and enthusiasts. Among the most notably bullish thought leaders is Julian Hosp, co-founder of TenX who still stands by his prediction that Bitcoin will rise to over $60,000. Hosp accurately predicted Bitcoins price plunge to around $5,000, however, only time will tell if the second half of his prediction will come true.
With the increase in adoption, structure, and regulation around the globe, large-scale enterprises are starting to feel comfortable investing in Blockchain related projects.