The past few weeks have seen attention taken away from Bitcoin after its impressive rally to $42,000 as the likes of GameStock and Doge capture investors’ imaginations. However, while Bitcoin has been cooling and consolidating just above $30,000, there is a strong chance that things may spring into action again tomorrow.
Bitcoin’s rally has been based on the increased interest of institutional investors, and one of the main routes to institutional investing of late has been the Grayscale Bitcoin Trust. This fund has been picking up momentum in time with the Bitcoin rally, and they look primed to push again.
As the new month has rolled in, the trust’s purchase premium is at around $6.50, having previously been as high as $40. This historically coincides with meandering price direction, while large premiums equal large upside moves for Bitcoin.
This is important and has been described in an article in technology magazine Hackernoon which explained the phenomenon as being tied to releases of GBTC shares which have been subject to a customary lock-up.
Once they are released, Bitcoin tends to shoot higher as customers put their profits back into BTC, while the time preceding such events corresponds to a lack of price action.
“What’s important to know is once these higher prices and premiums are realized after an unlocking, price goes on to consolidate. This lets the premium shrink again before its next unlocking event,” Hackernoon summarized.
With the next unlocking set for Feb. 3, anticipation should be building for a continuation of the Bitcoin bull run.
“This voids enables premiums to shrink again just like the nine times before,” the article continued. “And it’ll keep shrinking until the next unlocking. Because of this I expect the price to either consolidate or sag.”
While the increase in institutional interest has had its role to play in the growth of Bitcoin, it is the new general interest in stocks and new methods of investing that has arisen following the battle between WallStreetBets and hedge funds.
Many new investors are realizing that there are issues with the stock market, and even the platforms offering trading, such as RobinHood. This is pushing people to take a more decentralized approach to it, and with that comes Bitcoin a beacon of decentralization.