2020 was a mixed year for Bitcoin as an asset. There was a massive price correction event on March 12th which saw the price of Bitcoin fall to as low as $4,144, this also referred to as the “Black Thursday” price correction. However, the BTC price rebounded through the year especially in the fourth quarter ending the year strongly at around $29,000, thus gaining 303% since the start of the year.
WallStreetBets revolution extends its arm to impact crypto markets
The momentum gained in the 4th quarter of 2020, continued into January 2021 with the BTC price reaching its then all-time high of $41,940 on January 8th before falling to the $30k range yet again over the second week of January. The traditional finance markets were also in flux due to a revolution started by Reddit users of the subreddit ‘r/WallStreetBets’ towards the end of Jan pumping up Gamestop (GME) and AMC Entertainment stock which the majority of Wall Street had taken short positions on.
These so-called “amateur” investors pumped the price of GME and AMC stock by buying huge blocks of it which led to the price of these rising by over 2000% in a matter of a few days. The price gains of these two stocks led to an enormous value erosion for the majority of Wall Street that had taken short positions on these stocks, causing a cumulative loss of over $70 billion to Wall Street.
This success of WallStreetBets expanded the anti-establishment narrative that is always a conversation with Bitcoin considering its decentralized nature. This led WallStreetBets’s crypto wing, r/SatoshiStreetBets pumping up the price of DOGE and XRP as retail investors realized their ability to cause an asset’s price to skyrocket based on their demand. The effect of these groups of retail investors is evident in Bitcoin as well since the number of active addresses surge towards the end of January.
Perspective towards cryptocurrencies are changing
A blog released by ByBit called “January by the charts” speaks of how the other on-chain metrics and price models for Bitcoin have been healthy through January referring to BTC’s Spent Output Profit Ratio (SOPR) and PlanB’s S2F model which indicated that the final euphoric bullish phase for Bitcoin is underway.
A major shift in the mainstream perspective towards BTC is currently at its peak and it got another push when the world’s wealthiest man, Elon Musk announced his support for Bitcoin by changing his Twitter bio to simply read ‘#Bitcoin” followed by the tweet saying “In retrospect, it was inevitable”. This again led to retail investors getting lured to invest in Bitcoin evident in the spike in on-chain metrics on the day of Elon’s tweet.
According to a report released by Crypto.com, January 2021 is the month where the total number of global crypto users reached $106 million. This was the first time the total number of crypto users crossed 100 million, indicating that the surge is driven by the change of perspectives of retail and institutional investors towards cryptocurrencies, and Bitcoin being the flagship asset amongst other cryptocurrencies stands to benefit the most.
A survey conducted by BitFlyer called “The State of Investing & Crypto in the US and Japan” revealed how investors perceive cryptocurrencies as more lucrative investment assets than foreign exchange, commodities, Mutual Funds, and even bonds to the investors in the United States. The survey also goes on to divulge that 68% of investors are willing to invest more value into cryptocurrencies into 2021 stating reasons like low-interest rates and great timing to invest in cryptocurrencies as prime reasons.
These facts only go on to say how January could be perceived as the watershed moment for Bitcoin and cryptocurrencies as an asset where interest is driven by both retail and institutional investors alike especially with the likes of MicroStrategy & Greyscale expanding their crypto holdings and the announcements by BNY Mellon being involved in cryptocurrencies as a custodian and Mastercard looking to accept “select cryptocurrencies” on their payment network, without them specifying the specifics of the cryptocurrencies they have selected, it is a fair assumption to make Bitcoin would be one of them, considering it is one of THE most coveted assets in the financial markets now.