Bitcoin’s success is based on a number of factors that could possibly lead to a sustained upward trend.
Bitcoin (BTC) has had a strong November so far and many experts believe that the immediate future for the crypto currency remains very positive.
The current price of $16,000 represents a 23% increase since the beginning of the month. Most of this increase came after the US presidential election was over. The new annual record for 2020 shows that demand for Bitcoin is again increasing significantly.
The upturn to an interim high of USD 16,200 was driven largely by the 270 % increase in the sports market’s trading volume last month. According to figures released by Arcane Research’s market researchers, daily trading volume on 5 November was the highest volume since „Black Thursday“ on 13 March, when the Bitcoin price had dropped to less than US$4,000.
Bitcoin daily volume. Source: Arcane Research
The mood on the crypto market is also currently moving into record-breaking territory, as can be seen from the „fear barometer“ of the Crypto Fear & Greed Index, which is currently at 86, indicating „extreme greed“.
Fear & Greed Index. Source: Digital Assets Data
The „extreme greed“ indicates that many crypto investors have been caught by the so-called „Fear Of Missing Out“, or FOMO for short, so they fear to miss Bitcoin’s flight of fancy and therefore desperately jump on the bandwagon. Experienced traders in turn take advantage of this opportunity and book out partial profits as long as demand and price levels are high.
Increasing institutional interest
Another indicator of Bitcoin’s strength is the increased interest of institutional investors, which also picked up significantly in November. Several well-known companies and wealthy private investors are now investing in the market-leading crypto currency.
Open interest in the Bitcoin futures of the options exchange rose last week to a record high of US$ 934 million. This figure has risen significantly since October, with a 169% increase last month.
CME Bitcoin Futures Open-Interest. Source: Arcane Research
According to Arcane Research, this is primarily due to the increased number of market participants. The reports of the Commodity Futures Trading Commission show that there are now 102 large traders holding at least one position of 25 BTC. This figure has thus increased by 126% compared to 2019.
The more market participants, the better?
Increased demand from private investors and increased interest from institutional investors are together the driving force behind Bitcoin’s current high-flying performance. This climb could not only ensure high profits in the here and now, but could possibly have a lasting positive impact on the perception of the crypto currency as an investment product.
The higher the trading volume of Bitcoin on the classic crypto exchanges and derivative platforms becomes, the more likely it is that sooner or later a listed index fund (ETF) of the crypto currency will be admitted. This would in turn open the door to Bitcoin and the crypto markets for the general public.