2021; It is a very important year for Bitcoin and the larger cryptocurrency market. Bitcoin has come a long way in terms of adoption.
The 2020-21 bull run predicted two very important events that will affect Bitcoin’s investor base.
The first of these events was the increase in institutional investments experienced with the increasing interest from institutional and traditional circles. Bitcoin’s price quickly responded to this situation. This year has also seen many other developments, such as BTC’s relationship with the S&P 500 and the evolution of gold itself over the past few months.
As we approach the end of the first quarter of 2021, Bitcoin’s price and performances as a store of value assets show an extremely positive picture, which continues to cause an increase in retail and institutional investors. According to market data, it can be said that we have experienced the best 1st quarter of the last 8 years in terms of price evaluation.
Two developments in the same time period led to an increase in the price of BTC; The first of these developments was Tesla’s investment in BTC and the second was BNY Mellon’s announcement of integrated services for BTC and other crypto assets.
Also in the first quarter of 2021, Bitcoin saw Open Interest Levels of Futures reach their all-time high. This was seen as a double-edged sword that allowed the asset to grow in the long term, according to data provided by CoinMetrics. The report stated: “With new money flowing into the market, the open interest levels of BTC futures hit an all-time high before both major sales. Though painful in the short term, these sales helped close some overly leveraged (overly indebted) positions, paving the way for further growth. ”
Following this, the cryptocurrency has managed to maintain a positive price trend over the past three months. In fact, even close rivals of Bitcoin in the traditional financial market seem to have fine-tuned their relationship with the king coin. Bitcoin has maintained a high correlation with asset classes such as S&P, and thanks to this, it now has much more independence.
This change in relationship was also evident when looking at the Gold BTC correlation. CoinMetrics’ data showed that the change in BTC’s correlation to gold experienced an “even more drastic drop” despite a slight recovery in March.
This situation, as the idea of ”Bitcoin is digital gold” gained momentum, led BTC to devour gold’s market share.
In the coming months and the remaining three quarters of 2021, we can see Bitcoin’s correlation drop further when it comes to traditional assets. Due to the autonomy the BTC market has compared to other assets, this is likely to increase the confidence of institutional investors. The predicted values of price prediction models; It could happen in a short time as the coin finds enough momentum to surpass its $ 61,700 ATH.