As Bitcoin approaches $35,000, the volume of transactions has exploded.
Bitcoin’s trading volume has increased by more than 100% in the last 24 hours.
At this point in time, there does not appear to be a single catalyst behind this nightly growth.
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2021 is off to a great start for Bitcoin as assets continue to reach new and unprecedented levels.
As the price of Bitcoin approaches $35,000, we are reaching massive volume levels that have barely been seen before. In the last 24 hours, the price of Bitcoin has increased by approximately 15%. However, it is the increase in its volume that is most surprising. According to CoinMarketCap, the largest online cryptomarketing market capitalization aggregator, Bitcoin’s volume has increased by almost 104% in the last 24 hours. This is critical data because this volume growth in addition to the sharp rise in prices is an extremely bullish sign for the world’s largest cryptomoney.
What is the cause of this massive spike in Bitcoin volume?
One of the most interesting factors in this sharp increase is that there is no immediately identifiable catalyst. Since the beginning of the new year, Bitcoin has already increased by more than 20%. However, the BTC was already experiencing unprecedented daily/weekly prices even before the beginning of 2021.
One of the possible reasons for this price increase is the notorious FOMO, or fear of missing an opportunity. As the rise of Bitcoin is becoming common news around the world, investors and speculators may think that if they don’t buy Bitcoin now, they will continue to miss out on massive price gains.
One point to consider is that this increase in volume overnight took place from a Saturday to a Sunday. Thus, institutional investors and their employees are unlikely to be working on those days. This leaves this volume increase to retail investors.
Supporting institutional interest
This Bitcoin bullish run is fundamentally different from the previous 2017 bull-run on almost every level. In 2017, retail investors dominated the market. After peaking at around $20,000, the price then fell rapidly and was unable to hold its support. The current bull run is different because institutional investors and corporations are leading it overall.
Take MicroStrategy, one of the world’s largest publicly traded business intelligence companies, as an example. Michael Saylor, MicroStrategy’s CEO, was initially extremely skeptical of Bitcoin. In August 2020, however, he became one of the biggest supporters of BTC. Due to economic uncertainty, dollar devaluation, inflation, hedging, and other factors, Saylor made the executive decision to use MicroStrategy’s reserve cash to purchase Bitcoin. These purchases increased gradually as MicroStrategy raised $650 million through a debt offering to purchase more BTC.
There are many other companies that are integrating or investing in Bitcoin, sometimes in the tens or even hundreds of millions of dollars. PayPal, Square and Mass Mutual have also begun to get involved in Bitcoin and cryptosystems. This could set the tone for the rest of the financial sector.
All of this may explain why Bitcoin has experienced consistently high prices and regular price increases. However, it doesn’t exactly explain the growth in volume overnight. There may be no obvious factor behind this explosion in volume. However, the factors that led to it are undeniable.