Many of our DoWallet users have reached out to us via our customer support asking if we have any insights into what is driving this latest Bitcoin rally that has tested $9,000 last week.
While it is hard to pinpoint what has driven this latest phenomenon here are three of the top potential reasons that we have been observing and hearing in the past month.
1. Institutional Investors are starting to come in…
It is no secret that Fidelity, Bakkt (NY Stock Exchange-backed), and Coinbase are launching (or have launched) massive digital asset custodian arms. The two major news pieces in the past weeks that have indicated that we are close to seeing a massive influx of institutional money into the crypto asset class:
A Fidelity poll with institutional investors revealed that 47% of them see a place for digital assets in their portfolio. More details here.
Coinbase announced that it has reached $1 billion in custody from 70 institutions. More details here.
2. Major Announcements at Consensus
Consensus is one of the major events in the digital asset space, which happened in NYC on May 13 to 15. Many companies hold off major announcements for this event, which ultimately results in a phenomenon known as ‘the Consensus bump’. Here are the two that stood out the most:
Starbucks and Whole Foods now accepting Bitcoin! In a major publicity stunt, Flexa, backed by the Gemini and the Winklevoss twins, announced the ability to spend crypto in major retailers using the SPEDN app. One of the major criticisms of Bitcoin is the fact that very few people use it transact day-to-day. With SPEDN, it removes a lot of the hassle of being able to pay for something with crypto at a major retailer. Read more here.
Microsoft launched a decentralized identity tool on the Bitcoin blockchain. Again, major companies building on top of Bitcoin and supporting the BTC hegemony. Read more here.
3. Stock Market hedge?
With stock markets trading at record levels/multiples, and increasing uncertainty stemming from this administration’s trade policies, many retail investors we have spoken to have seen Bitcoin as a hedge to a stock market drop. Bitcoin has decoupled from traditional markets, so those who made this hedge a few months ago have seen their investments soar while the stock market hiccuped a few times. More info here.
So where is it going next?
One of the major announcements for digital assets companies, like DoWallet, is Facebook’s ease on their ban of advertisement of a broader set of companies in the crypto space on their platform. This may drive additional adoption of a larger set of users, and hence Bitcoin price when it comes to fruition in the coming days. Nonetheless, uses and investors always need to be aware of the complex and volatile nature of the Bitcoin, which despite being the world’s largest digital asset, it is still a fraction of the size of Apple in terms of market cap. This makes it susceptible to wild market swings.
However, if you do decide to partake in this wave, be mindful of where you buy it and how you store it. Here is a piece of ours from December on why you shouldn’t keep all your funds on an exchange.
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