The start of February brought yet another body of evidence supporting the idea that the ever-increasing spike in cryptocurrency prices has deep institutional roots. Fueled by market whisperer Elon Musk and Tesla announcing a $ 1.5 billion Bitcoin deal, the bullish cycle was boosted by more news coming from the likes of Mastercard, Amazon and BNY Mellon.
The level of interest around the industry is definitely on the rise, as the price of Bitcoin (BTC) is fast becoming a widely discussed topic on most financially oriented TV stations. With big players at the helm, is the crowd steadfast in the back seat, or does it have a say in how long the party will last?
The power of corporate players moving cryptocurrency markets comes from two interconnected sources: their capital invested in digital assets and the ability to drive public sentiment, often through their own example.
Some companies have more social influence than others due to factors such as the personal charisma of the founders or the general perception of the brand. In Tesla’s case, these two people came together, creating the explosive effect we observed last week.
According to Nisa Amoils, a partner in technology-focused A100x ETF, the fact that Tesla’s move has been so important to the digital asset markets is no coincidence. Amoils told Cointelegraph that “Tesla and Bitcoin have more in common than meets the eye, and it’s not just volatility,” adding more:
“They both have communities – almost religious – behind them, and that’s an important trend to watch as we also see it in certain protocols and DeFi. Elon is talking to both retailers and organizations this time around, and he’s done his time right after GameStop retail push.”
Amoils expects more copycats to emerge in the short term, along with continued price action. In the long term, in her view, the latest offering of institutional verification will cement Bitcoin not only as an investment tool but as a medium of exchange as well: “a unique asset with multiple functions”.
Talking to “retail and enterprise” appears to be pivotal here. Tesla’s move was very influential due to the automaker’s unique position as a high-value technology company and a well-known brand with a significant social following. This is a reminder that institutional powers can make the biggest impacts in today’s financial markets when they sweep the crowd along.
Feelings are king
Major Investors are not just a bunch of extra movies that you watch silently as financial institutions and large corporations inflate asset prices as they like. For example, potential retail investors in the US alone are sitting with an amount of money roughly equal to the capitalization of the entire cryptocurrency market, and waiting for that money to be released.
Pat Lafquia, CEO and Co-President of Oasis Pro Markets, told Cointelegraph that the combination of disposable savings and fear of missing out on price action could motivate more people to enter the industry:
American households have accumulated about $ 1.6 trillion in excess savings over the past year, according to data from Oxford Economics. Since people at home are looking for new asset classes, since interest rates are so low, this can lead to an increase in interest [in cryptocurrencies]. With the growth of corporate sentiment and the general public seeing large institutions leap into bitcoin and legitimize it, we may see a FOMO take off for those who remain on the sidelines. ”
If we take this line of thinking further, the direct result of the current institutionally driven rally, or next, could be an influx of new retail investors on a large scale. Sooner or later, multiple iterations of this process should lead to digital assets reaching the Holy Grail of mass adoption.
Thus, following public sentiment about cryptocurrencies is just as complete as tracking the movements of institutions. So far, things have been looking good on this front. Joshua Frank, co-founder and CEO of encrypted data provider The Tie, told Cointelegraph that Twitter activity on Bitcoin rose to an all-time high in the wake of Tesla news.
Moreover, Bitcoin’s Daily Sentiment Score, which measures the extent to which positive or negative conversations have continued on a topic over the past 24 hours compared to an average of 20 trader days, reached an annual high. These metrics show that in the short term, the mood of Twitter users has been extremely bullish.
Long-term sentiment measures also looked promising. Frank added that Bitcoin’s Long-Term Sentiment Score, which measures how positive investors are in assets over the past 50 days compared to the past 200 days, has jumped significantly, reaching a value of 75 out of 100. Frank explained to Cointelegraph:
“The continued positive long-term result of sentiment means that investors continue to become more positive about Bitcoin, and this increased sentiment has been reinforced by TSLA news.”
If Tesla’s example will indeed inspire a flock of corporate followers, the future of money may come sooner than expected. On the other hand, the cryptocurrency market may still be very volatile and unpredictable for some legacy companies to enter. As such, it can be a case of gradual entry rather than a one-day revolution.