Despite Bitcoin prices rising through most of 2019, there is nowhere near the same mania surrounding the cryptocurrency industry as when the price of the leading digital asset surpassed $10,000 for the first time in 2017. Some analysts believe the rising prices of late, coupled with a seeming lack of interest from retail investors, suggests that institutional investors are driving the buying pressure that has seen Bitcoin rise to five figures again.
A New Demographic
According to evidence from cryptocurrency analysis Twitter account @realcryptostats, cryptocurrency exchanges are not seeing the same levels of new followers as they did during and immediately following the spectacular rise and fall of Bitcoin at the end of 2017. In fact, the number of new follows per month has remained around the same level at Binance, Bitfinex, and Coinbase since around this time last year.
Although far from sufficiently concrete enough to conclude from alone, the Twitter follower growth data does support other evidence suggesting that this year’s buying pressure is coming from a different set of investors. Take Google Trends, for example. Searches for terms like “buy Bitcoin” are nowhere near what they were during the 2017 price run-up.
The super-bullish argument would have you believe that institutions – the largest money managers on earth – were buying up vast quantities of Bitcoin for a proverbial rainy day. Perhaps it’s Bakkt, the long-awaited Bitcoin futures platform from the Intercontinental Exchange, loading up on BTC prior to its recently-announced, late September launch date.
The rationale behind such arguments is that typical institutional investors aren’t going to Google to search “how to buy Bitcoin,” before signing up to a Coinbase account to make their hundred-million-dollar-Bitcoin-buy. They would favor over-the-counter trading desks, as would any efforts by Bakkt to buy Bitcoin before its launch.
Can Altcoins Compete?
However, the current speculative evidence supports a couple of much-less-exciting narratives too. Given that Bitcoin dominance is rising to levels seen prior to the 2017 bull run, there is an apparent departure from the so-called altcoin market. Much of this capital has ended up sitting in Bitcoin, waiting for the next “alt-season,” or perhaps perceiving the original cryptocurrency as a better bet. Individuals contributing to buying pressure caused by an exit from altcoins would clearly not need to Google search how to buy Bitcoin or be a new follower at a cryptocurrency exchange platform.
Similarly, although rather unlikely, buying pressure may primarily be caused by the same set of retail investors that were burned throughout 2018. Maybe they want another effort at investing in Bitcoin now that the market seems to have bottomed out.
You can also make an argument that most of the 2019 buyers are from nations like China, where Google and Twitter are not as widely used. Either of these two scenarios could just as easily account for the combination of the lack of Google interest in Bitcoin and a few Twitter users following cryptocurrency exchange accounts for the first time.
In reality, the truth is probably comprised of a combination of all of the above, plus some potential factors we don’t know about yet. Without other forms of evidence to suggest one way or another, it is difficult to draw much from metrics such as Google Trends and Twitter follower counts.
What do you think we can conclude from the Twitter interest in cryptocurrency exchanges and Google trends data? Who do you believe has been buying so far during 2019?
Images are courtesy of Twitter, Shutterstock.