According to the survey data from Grayscale Investments, the coronavirus pandemic may be the primary factor behind Bitcoin’s current rally and new investors’ decision to buy BTC. Even as the price rises toward $19,000, the rush continues as both institutional and retail investors are keen on accumulating Bitcoin. However, data from crypto derivatives markets show that institutional investors contribute more to driving Bitcoin volumes to new highs.
Grayscale Investments is a digital asset management company that currently holds over $9.8 billion in assets under management. According to the company’s yearly survey, 83% of all Bitcoin investments started in the last 12 months when the viral infection was minimal.
Out of 38% of all current Bitcoin investors that were interviewed in the last four months, 63% say that the Covid-19 is responsible for the economic disruption experienced this year. But, the situation positively influenced their decision to buy Bitcoin.
Grayscale further reveals Bitcoin’s progress so far.
Grayscale Investments survey also shows that Bitcoin is gaining mainstream adoption, carrying the general public and investor class along. Seemingly, the mindset of those who are yet to invest in Bitcoin has changed considerably since 2019. This year, 55% of the investors interviewed disclosed interest in acquiring Bitcoin, which is a substantial increase from 36% in 2019. A good number of survey participants also believe that cryptocurrencies will be regarded as mainstream mediums of exchange by the end of the decade.
Moreover, the caliber of investors showing interest in Bitcoin’s store-of-value narrative will increase, and mainstream adoption may come sooner than most crypto analysts predicted. A little proof of this is a recent report from Citibank, where the author estimates that Bitcoin price may reach $318,000 by December 2021.
Will investors lose interest in Bitcoin when COVID-19 is gone?
Since the survey links the surge in Bitcoin purchase to the coronavirus pandemic, the question of how Bitcoin’s price will respond when Covid-19 is gone is a valid question on the mind of some investors.
Responding to the question, the author of The Crypto Portfolio and a former digital asset fund manager, Jonathan Hobbs, told Cointelegraph:
“Covid-19 was the match that lit the flame for institutional adoption. But the firewood was building up long before it came. Now that the fire is burning, it will take a lot of water to quench something that is growing wild already. However, when the world is finally free from Covid-19, the economy will still be sick with debt. And central banks will continue to print money to inflate away those debts as they have done since the 2008 financial crisis. Therefore, the institutional narrative of Bitcoin being an inflation hedge will likely continue even after the pandemic is over.”
The expanding monetary policy resulting from the negative impacts of the pandemic will surely change the economic landscape in the nearest future. Although some crypto analysts may want to exaggerate the role of the pandemic in the recent Bitcoin rally, we cannot also deny the fact that it played a crucial role in accelerating investors’ interest in cryptocurrencies.
Meanwhile, one of the positive factors that attracted investors is Bitcoin’s low entry barrier and its ability to gain value when traditional markets are volatile. It is safe to say that these factors are likely to stand, even when the pandemic is over.