In the past, February could be considered a watershed moment in the history of Bitcoin. For the month, market professionals and economists may look back as the markets saw a massive rally before a correction took place at the end of the month.
The main cryptocurrency, Bitcoin (BTC), peaked at $ 58,352 on February 21, eventually surpassing the $ 1 trillion market cap. On the same day, the second most important asset in space, ether (ETH), peaked at $ 2,033.08.
In February, Bitcoin’s price was like a roller coaster, almost drawing a bell curve. BTC traded at $ 32,889 earlier in the month and gradually rallied to an all-time high of $ 58,352 on February 21, before the flash crashed to a $ 43,700 range at the end of the month.
So, what’s behind this meteoric rise and subsequent decline that now leaves many in the community wondering if the coded bull race is still going on?
It’s been weeks, decades
Bitcoin has seen institutional participation in asset increases since late 2020. In February, one of the oldest banks in the world, BNY Mellon, introduced cryptocurrency as a warehouse. Given the size and legacy of these banking institutions, it says a lot about where Bitcoin reached its maturity, with ancient views such as Warren Buffett, who described the original as a useless “illusion” even “square of rat poison.” This indicates how strong its position is in relation to Bitcoin.
Indeed, these views change frequently. The latest to refuse to become an investor is Shark Tank star Kevin O’Leary, who will now set aside 3% of his portfolio to Bitcoin. He also suggested that every company that invests in it should consider including bitcoins on the balance sheet. Previously, he called cryptocurrencies a “cryptocurrency trap” and the value of Bitcoin “nothing gigantic.”
Regarding these changing perspectives, Shin Ai, who is in charge of product research and development of cryptocurrency derivatives at Bybit, a cryptocurrency derivatives exchange, told Cointelegraph:
“In February, a flurry of upbeat news from Tesla, MicroStrategy, Square, and BlackRock showed that BTC was replenished with their assets, as well as BNY Mellon, Deutsche Bank and Mastercard, all accepting Bitcoin.”
In addition to BNY Mellon and Deutsche Bank, multi-tier investment banks such as Goldman Sachs and Citigroup have recently taken a stance on Bitcoin. Goldman Sachs announced that it will restart the cryptocurrency office, which closed in December 2017. Veteran trader Peter Brandt announced on Twitter that “it’s time to protect your money” as Goldman Sachs enters the niche market.
The Citigroup report says that Bitcoin is currently at a “turning point” to either become the currency of choice for international trading or see “an internal speculative collapse.” The report says Tesla and MasterCard’s involvement was the beginning of a shift towards the mainstream.
Among the various organizations that are now flocking to the cryptocurrency markets, Tesla is probably the most visible and the first to note a paradigm shift due to the influence of its CEO Elon Musk on the cryptocurrency markets.
Its impact on the markets is now often referred to as the “musk effect”. On February 8, Tesla announced that it had bought $ 1.5 billion worth of bitcoin at the time as equity on its balance sheet. This move increased the price of bitcoins and gave a $ 10,000 price increase over the course of the week. Just two weeks later, on February 21st, Bitcoin hit an all-time high.
Aside from the obvious institutional interest, it seems that inefficiencies and uncertainties in the global economy and traditional financial markets are permeating the bitcoin markets. As Ay said, “Bitcoin is a highly reversible asset as the viability of being a reserve component increases with market capitalization.” “In a world hungry for profit, financial institutions naturally gravitate towards cryptocurrencies, which still provide higher liquidity than traditional economies,” he added.
RELATED: Can’t beat them? Join Them: Mastercard and Visa Open Bitcoin Case
Evidence that the latest real estate movement in cryptocurrency markets is institutional is found in TIE’s NVTweet ratio analysis, which compares social discussion about cryptocurrencies to market value. The ratio reflects the number of tweets a particular currency has for every $ 1 million in market cap.
The rapidly growing NVTweet ratio indicates that the market for a particular currency is institutional. If the market value of a currency is growing faster than its social size, this may indicate less retail market participation for that currency.