14 November 2020

grayscale btc

In this past week, Bitcoin eclipsed $16,000 for the first time in 2020 which led to a number high-profile investors publicly announcing their support of BTC over more “traditional” asset classes. However, investors are looking to how institutional investors – including the top Bitcoin asset management firm (Grayscale) – are becoming a driving force behind the surging price of Bitcoin.

Market analysts say that this is just the beginning of the new bull run as Bitcoin will soon move above its all-time high of $20,000. Banking giant JPMorgan says that institutional players have caught the Bitcoin bug as they have started ditching Gold ETFs for Bitcoin.

The Impact of Institutional Investors & Bitcoin Asset Management Firms

In a strong bullish momentum, the Bitcoin (BTC) price has moved past $16,000 levels for the first time since January 2018. With this move, Bitcoin has also hit its new 2020-high at $16,420 as its market cap zooms above $300 billion.

At press time, Bitcoin (BTC) is trading at a price of $16,246 with a market cap of $301 billion. After almost a week-long consolidation at around $15,700 levels and a monetary dip below $15,000 levels, the bulls finally raged-in pushing BTC higher above $16,000 in a strong and convincing move.

Over the last week, some of the notable investors from the traditional financial space have endorsed Bitcoin. This includes billionaire hedge fund managers like Stan Druckenmiller and Bill Miller.

During an interview with CNBC earlier this week, Druckenmiller went over and above praising Bitcoin over Gold and saying:

“Frankly, if the gold bet works the bitcoin bet will probably work better because it’s thinner, more illiquid and has a lot more beta to it. It has a lot of attraction as a store of value to both millennials and the new West Coast money and, as you know, they have a lot of it”

Wall Street investing giant Bill Miller has similar opinions saying that every big financial institution to have exposure to Bitcoin in the coming months. I think every major bank, every major investment bank, every major high net worth firm is going to eventually have some exposure to bitcoin or whats like it, which is gold or some kind of commodities,” Miller added.

Citing some of the historical patterns post halving, some of the crypto analysts are saying that BTC is still awaiting a 2017-like rally coming ahead in 2021. It’s just earlier this year in May 2020 that Bitcoin (BTC) underwent its fourth halving reducing the block rewards to half. Analysts are thus expecting Bitcoin to easily move past the six-figure mark aka above $100,000 in the next bull run.

Bitcoin Halving and Price Chart
Source: Ecoinometrics

Bitcoin Cash Hard Fork Faces Backlash

Bitcoin Cash (BCH) is set for its third hard fork on November 15th. As part of the BCH hard fork, the Bitcoin Cash blockchain will be splitting into two other networks, Bitcoin ABC and Bitcoin Cash Node (BCHN).

The split happens as the Bitcoin ABC team proposes an alternative upgrade that drives 8% of the mining rewards to the development fund. The result has caused an uproar from the opposing developer base, Bitcoin Cash Node, who highlight that Bitcoin ABC’s proposition directly contradicts the foundation of decentralization.

Most important, independent developers are speaking out against Bitcoin ABC’s proposal. Simple Ledger Protocol, a developer organization that issues secure tokens on the Bitcoin Cash blockchain, has stated that they “do not consider a protocol that redirects Coinbase rewards, to be Bitcoin Cash (BCH), especially when such a rule was announced unilaterally.”

Reportedly 82% of the miners are not in favour of this proposition by the Bitcoin ABC camp. At press time, Bitcoin Cash (BCH) is trading at $255 with a market cap of $4.7 billion.

ZCash Hard Fork Set for November 18th

On the other hand, privacy coin ZCash (ZEC) is also set for a hard fork on November 18. The ZCash blockchain network is undergoing a massive system update that will improve the network security while creating ZCash’s own development fund.

With the upcoming hard fork, the block rewards for ZCash miner will reduce from 6.25 ZEC to 3.125 ZEC per block. However, ZCash’s native cryptocurrency (ZEC) has received a major boost to offset the reduction in reward totals, as miners will receive a ZEC equivalent that will live and hold value on Ethereum for each ZEC they hold.  

At press time, ZEC is trading at a price of $63.21 with a market cap of $661 million. The price of ZEC has surged 120% year-to-date.

JPMorgan Shines Line on Grayscale, Leading Bitcoin Asset Management Firm

A large number of institutional investors have already started leaning towards Bitcoin (BTC) as an alternative to gold and a potential choice for an inflation hedge.

JPMorgan analysts released a report that highlights how Grayscale Bitcoin Trust, an investment product from Bitcoin asset management firm Grayscale, has outperformed the Gold Exchange-traded-funds (ETFs), which supports the trend of institutional investors gravitating to Bitcoin as an alternative to gold.

grayscale btc etf
Source: Bloomberg Law

In particular, JPMorgan analysts wrote:

“This contract lends support to the idea that some investors that previously invested in gold ETFs such as family offices, may be looking at bitcoin as an alternative to gold. The potential long-term upside for bitcoin is considerable if it competes more intensely with gold as an ‘alternative’ currency given that the market cap of bitcoin would have to rise 10 times from here to match the total private sector investment in gold via ETFs or bars and coins.”

During the last month of October 2020, Bitcoin Trust (GBTC) further widened its gap with gold with its growing institutional inflow. GBTC handles more than $6 billion of assets under management (AUM), which has grown more than 150% in 2020.

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Edmund McCormack
Tech industry veteran and blockchain technology investor. Simplifying cryptocurrency for almost a decade.

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