Bitcoin prices have reached new heights recently, and the tightening supply dynamics and rising demand have sustained this rise, according to a report compiled by London-based crypto custodian Copper.co.
Copper argued that the recent rise in price is a function of the steady increase in demand for BTCUSD bitcoins,
and the growing scarcity of the asset, which has a maximum stock of 21 million, which should be reached by 2140. The researcher also said that most of the interest in new bitcoins comes from North America, mainly from the USA.
Approximately 18.625 million bitcoins were created, or digitally extracted, in the jargon of cryptocurrency enthusiasts, according to CoinMarketCap.com, but a good deal of that has been lost, Copper folks wrote.
According to his estimates, 56% of bitcoins are owned by investors, 18% are lost, 15% are held by so-called traders and the rest has not yet been extracted (see attached chart):
via Copper.co
Copper said that since most investors are long-term owners, representing eight out of ten holders of the cryptocurrency, the increase in appetite for the world’s most popular digital asset could have an exaggerated effect on values.
The researchers said the increase in bitcoin above $ 40,000 was already at stake even before Tesla Inc. TSLA,
made his surprise request to regulators on Monday, declaring his $ 1.5 billion investment in bitcoin, and his decision to allow customers to buy their products with bitcoin.
“The data shows that new investors pushed prices much higher
last six months of 2020, to acquire the north of 2 [million] bitcoins, ”wrote the Copper researchers in the study.
“In order to be able to buy bitcoin in such large quantities, the price went up
well above the $ 20,000 mark that helped persuade early investors
to sell your cryptocurrency above its previous record, ”they said.
The crypto market depends on a new supply of about 3.2 million bitcoins on the exchanges and maintained by traders, according to the report.
The study also found that investors who owned at least 1,000 bitcoins for about three months increased their holdings in 2020 by 173%.
This growing demand, combined with restricted supply, helped to raise bitcoin values to a total market value of about $ 800 billion, and Copper said that the main driver of demand has been American buyers receiving supplies of Asian miners.
“The price increase is the result of a marriage of demand and liquidity crisis that
happened in the beginning of 2020, when the outflows of the exchanges – that is,
bitcoins being moved to self-care – have increased significantly ”, concluded the company’s research.
Copper also made an interesting discovery, noting that almost a third of the bitcoin trading volume occurs during the period when the New York Stock Exchange is open and investors should focus on trading on the Dow Jones Industrial Average DJIA,
and the S&P 500 SPX index,
The fact that much of the bitcoin trading takes place during the stock market hours, between 9:30 am and 4:00 pm, may explain why the movements of the S&P 500 are sometimes seen as correlated to bitcoin prices, Copper wrote.