2020 was certainly an unpredictable year. But while the past year has been a rollercoaster ride of highs and lows in the stock market, bitcoin maintained a steady increase in price.
Traditional finance professionals and crypto enthusiasts alike were shocked to see bitcoin top US$30 000 in 2020, indicating that the cryptocurrency is more than just a trend or an edgy investment choice. Once viewed as an outlier with unreliable foundational support, bitcoin is now becoming more accepted among old-fashioned banking industries and government officials.
Institutional investment in bitcoin continues to grow
Despite bitcoin’s strong prospects and backing from many well-established investors, there are still some sceptics who compare bitcoin’s rise to the 2017 crash. Back in 2017, investors poured money into bitcoin due to a media-fuelled frenzy about the new cryptocurrency trend. Today, there is much evidence people are steadily becoming more comfortable with the idea of investing in crypto.
For example, 40 percent of millennials surveyed said that they would strongly consider investing in cryptocurrency in response to the recession. Despite the fact that the cryptocurrency has reached new records, there are no signs of this price spike being artificially inflated or indicative of a bubble soon to burst.
Consider that institutional investment is at an all-time high, despite little attention from the mainstream media. Central banks and even governments are rushing to adopt their own cryptocurrency, the result of a deeper understanding of the strength of block chain technology. Furthermore, the US dollar, held as a currency standard across the world, is being printed at levels never seen before. This has caused many in finance to predict future worldwide inflation of fiat currency, with bitcoin viewed as a more stable alternative.
Venmo, PayPal and Square have invested and integrated their technology with bitcoin in 2020, with the latter two companies swallowing up more than 70 percent of newly-minted bitcoin.
Publicly-traded business consulting firm MicroStrategy owns 38 250 bitcoin, bought for $250 million in 2020 and now worth about $1,2 billion.
Fund manager Ruffer Investment Management has moved around US$675 million of its clients’ funds into bitcoin, a move that surprised many in the traditional finance world.
Finally, even global financial giant American Express recently announced its investment in crypto trading startup FalconX. It’s clear that the ‘big boys’ of finance and credit are becoming more eager to hop on board the cryptocurrency train, with bitcoin remaining the fuel behind the momentum.
Tim Fries is a US-based journalist focusing on developments in the crypto space, and co-founder of The Tokenist.