The Bitcoin rally born in 2020 is carrying over into 2021. The largest digital currency is regularly hitting record highs and recently eclipsed the market capitalization of Facebook (NASDAQ: FB).

FB 1 Year Performance

Bitcoin is soaring, stoking old memories of 2017, a run that gave way to a spectacular decline the following year. Yet many market observers believe that outcomes will be different this time around.

“It seems like we’re in the middle of a simultaneous awakening among institutions to bitcoin as an uncorrelated store of value assets with the possibility of serving as an inflation hedge in the face of a highly unconventional monetary policy environment,” notes Frank Spiteri, CoinShares Chief Revenue Officer. “Our exchange data analysis offers further clues into both retail and institutional behaviour lately, with volumes and exchange trade distributions being of particular interest to us. Bitcoin fervour over the last month has reached record levels as indicated by volumes on exchange. Total market volume traded (in US$ terms) peaked at US$25bn on 4th January 2021, far surpassing the historical highs of US$15.6bn seen in March 2020.”

Banking on Bitcoin

Bitcoin, blockchain, and cryptocurrencies provide a new avenue to transfer wealth instantaneously over the internet. The crypto asset market has been an innovative disruptor, reflecting all the classic phases of a disruptive technology.

“Trusted exchange data, where there is a more accurate measurement of volumes and better regulatory supervision, highlighted Bitcoin volumes peaked at US$12.9bn,” according to Spiteri. “We have also witnessed a rise in the proportion of investors using trusted exchanges, suggesting greater participation by institutional investors who typically favour exchanges with a higher level of regulatory oversight and more effective custody controls. Trusted exchanges now make up 58% of the total, higher than at any time during 2020.”

There have been multiple applications for crypto-tracking ETFs over the years, and the SEC has denied them all, underscoring VanEck’s commitment to the goal. However, there have been some SEC changes, such as a shift in leadership. Jay Clayton relinquished his role as chairman, and growing comfort with the crypto on Wall Street could favor an ETF introduction say analysts.

The value of the entire cryptocurrency market, which is made up of bitcoin and other digital coins like Ether and Tether, surpassed $1 trillion for the first time earlier on Thursday, according to data from Coinmarketcap. Bitcoin is by far the leading cryptocurrency, with a market value of over $700 billion.

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The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.