Bitcoin has had a phenomenal start to 2021, topping $40,000 per bitcoin for the first time ever.
The bitcoin price has added a staggering 400% over the last 12 months, climbing as institutional investors warm to the cryptocurrency and payments giants such as PayPal
Now, with retail investors increasingly eyeing bitcoin in light of its recent gains, new research shows how bitcoin “whales” accumulated a huge number of bitcoin tokens in December, helping the bitcoin price to never-before-seen highs.
“Bitcoin ‘whales,’ addresses with more than 100 bitcoin, accumulated an additional 47,500 bitcoin amid bitcoinâ€™s ruthless rally throughout December,” researchers at the San Francisco-based bitcoin and cryptocurrency exchange Kraken wrote in a report out Thursday.
“Not only did the aggregate number of bitcoin in whale addresses hit its highest level all year, 11.46 million bitcoin, but addresses with a balance of more than 100 bitcoin surpassed 16,300â€”a reading last seen on March 16, 2020.”
This massive bitcoin accumulation helped the bitcoin price to soar 50% through December, with the price rise accelerating in the new year. The bitcoin price has added a further 40% in the first week of 2021 alone.
Meanwhile, bitcoin’s reputation as “digital gold” has grown in recent months as governments around the world flood markets with unprecedented levels of freshly printed cashâ€”leading to a surge of big-name investors naming bitcoin asÂ a potential hedge against inflation.
This growing macro-case for bitcoin has vindicated long-time bitcoin believers who have cheered the recent price explosion.
“A Rubicon has been crossed with entirely new categories of institutions and corporate buyers; the retail fear-of-missing-out cycle is starting again; and this is all coming into a macro environment featuring significant tailwinds in the form of growing inflation expectations,” Nathaniel Whittemore, host of bitcoin analysis podcast The Breakdown, wrote in emailed comments.
“Compared to other macro hedges, bitcoin is not only cheaper but has much more attractive upside potential. Just because the price is more than it was doesn’t mean it isn’t still undervalued.”
However, others have warned bitcoin could be headed for a correction.
“Whilst we think the future is very bright for the asset class, we still anticipate some bumps along the way,” David Mercer, the chief executive of FX and institutional cryptocurrency exchange LMAX Group, wrote in a note.
Despite these expected “bumps,” most in the bitcoin and cryptocurrency space are predicting the bitcoin price will continue to rise over the long term.
“This year weâ€™ve seen the price move up past the $30,000 area due to the uncertainty gripping markets and whilst we do anticipate further dips, potentially down to the $15,000 mark, we do not think it is unreasonable to suggest bitcoin could push towards $50,000 in 2021,” Mercer added.
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