A drop in the market price of bitcoin will trigger a surge in institutional investment, driving up the price permanently, according to the CEO of a leading financial advisory and fintech.
“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,” said Nigel Green, chief executive and founder of deVere Group.
The world’s largest cryptocurrency, which is 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. By mid-Tuesday it was trading just below $59,000 on the Coinbase platform.
“This momentum came as investors are looking for alternatives to traditional currencies. Central banks and governments continue to helicopter new cash into economies, Wall Street giants increasingly pursue crypto activities, and billionaire entrepreneurs such as Tesla’s Elon Musk and Twitter’s Jack Dorsey pile into the cryptocurrency, amongst other factors,” explained Green.
“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’.”
Sellers push price down, for now
The deVere CEO said this momentum appears to be slowing down which, together with greater ongoing regulatory scrutiny, may prompt the herd-like mentality of many inexperienced investors who will now cash-out their bitcoins, 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,” said Green.
“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.”
Green explained that this temporary bitcoin price slowdown could trigger a surge in institutional investment, leading to prices going up permanently.
The deVere CEO concluded: “It’s likely that institutional investors are waiting for prices to dip a little further and are poised to significantly increase their exposure to crypto when they do.
“Should this happen, as we expect it will, we know that this will drive prices upwards.”
Last month a deVere Group global poll found that 70% of those Baby Boomers and Gen X respondents are already invested in digital currencies or are planning to do so this year.
“Baby boomers and Gen X, who own most of the world’s wealth, are embracing the cryptocurrency revolution. This will serve to further bolster prices in the market in the longer-term,” Green had said.