A bitcoin price drop will trigger a surge in institutional investment, driving the price up again.
This is the word from Nigel Green, chief executive and founder of deVere Group, after bitcoin – up nearly 500% since the rally started in October – has pulled back after hitting all-time price highs earlier this month of more than $61 000.
Green says: “Bitcoin has been on an epic rally since last October. Almost week-on-week, the price has been smashing through barrier after barrier, reaching new highs.
“This momentum came as investors were looking for alternatives to traditional currencies as central banks and governments continue to helicopter new cash into economies, as Wall Street giants increasingly pursue crypto activities, and as billionaire entrepreneurs such as Tesla’s Elon Musk and Twitter’s Jack Dorsey pile into the cryptocurrency, among other factors.
“This has all spiked the hype in the media and massive interest amongst retail investors, who are keener than ever to invest in digital currencies, dubbed ‘the future of money’.”
He adds that the momentum appears to be slowing down, with bitcoin consolidating at around $55 000.
“The current slow-down, together with greater ongoing regulatory scrutiny, can be expected to prompt the herd-like mentality of many inexperienced investors who will now cash-out their bitcoin, forcing the price temporarily lower.
“And this is when institutional investors, many of whom are just beginning to dip their toe in the crypto water, will likely dive in. They will employ the ‘buy the dip’ mantra.
“With them, they will bring their enormous capital, clout and expertise to the market, and this will then prove to be another considerable confidence shot for even more retail investors.”