Bitcoin's Growth from COVID-19 Lows to New Highs

In the last few years, Bitcoin has really caught everyone's eye, not just the regular Joe looking to invest a bit on the side but also the big guns in the finance world.

by Faruk Imamovic
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Bitcoin's Growth from COVID-19 Lows to New Highs
© Getty Images

In the last few years, Bitcoin has really caught everyone's eye, not just the regular Joe looking to invest a bit on the side but also the big guns in the finance world. One of the biggest game-changers has been these new Bitcoin ETFs, which are basically a way for people to get in on the Bitcoin craze without having to buy the actual coins themselves.

By early 2023, these ETFs have been pulling in crazy amounts of money, hitting nearly $30 billion and setting records for the most successful launch ever. But, with all this buzz comes a bunch of new headaches to figure out.

The Looming Liquidity Crisis

Ki Young Ju, who runs CryptoQuant, a company that looks into all the nitty-gritty details of Bitcoin transactions, is worried that there might soon be a big problem with not having enough Bitcoin available for people to buy.

He's saying that if big investment funds keep buying into Bitcoin ETFs (which are sort of like baskets of Bitcoin you can invest in without owning the actual Bitcoin) at the rate they're going now, in about six months, there won't be enough Bitcoin to go around.

This problem is made worse because the big players in the game, like the platforms where you buy Bitcoin and the folks who mine it, are sitting on about 3 million Bitcoins, making the shortage even more of a headache. Ki thinks that people who are betting on Bitcoin's price to drop might find themselves in a tough spot.

He pointed out that in just one week, these Bitcoin ETFs scooped up over 30,000 Bitcoins because of how much these big-time investors want in. This situation could lead to a sudden jump in Bitcoin prices because there's just not enough to meet everyone's wants, shaking up the usual way things balance out in the market.

Grayscale and the ETF Phenomenon

In the middle of all this Bitcoin ETF excitement, there's a different story going on with the Grayscale Bitcoin Trust (GBTC). Even though most people are super positive about Bitcoin ETFs, GBTC has been seeing a lot of people pulling their money out, almost $500 million every day.

But, because the price of Bitcoin has gone up since these ETFs came onto the scene, the total value of what GBTC has in Bitcoin hasn't really dropped. This situation shows just how tricky and intertwined different ways of investing in Bitcoin can be, and how they all affect the big picture of the cryptocurrency market.

Bitcoin © Getty Images

The Ripple Effects of Institutional Involvement

As more big investment firms get into Bitcoin, there are going to be some big waves made. Ki thinks that there's going to be a moment when the demand for Bitcoin really outstrips how much is available to buy, and when that happens, the price could shoot up way more than anyone's guessing right now.

This is all because there might not be enough Bitcoin for sale, making the market jittery with prices going up and down a lot. Ki's also noticed that more and more Bitcoin is being hoarded by people who don't want to sell, suggesting that the craving for Bitcoin hasn't hit its peak yet.

This whole scenario makes you wonder what's going to happen with Bitcoin and the whole crypto scene in the future. As these big-time investors keep piling in, the tug-of-war between how much Bitcoin is out there and how much people want it is going to get more intense.

This could shake things up, making it an exciting or nerve-wracking time for people who are deep into crypto or just starting out.

The COVID-19 Market Crash

On March 12, 2020, the finance world went through a really rough day, with Bitcoin's value dropping by more than half.

This was all happening while the whole world was trying to figure out how to deal with the new pandemic. But what's amazing about Bitcoin is how quickly it bounced back and then some. From hitting a low point of $3,600, it shot up by nearly 2,000%, proving it could stand strong against global shake-ups.

This comeback wasn't just luck. A lot of smart investors saw the crash as a golden chance. They bought Bitcoin when it was down and even used the government stimulus checks to buy more. Those who did put their stimulus money into Bitcoin ended up making a ton more back, showing just how much you could gain from this investment.

A Paradigm Shift in Investment

After the pandemic, the way people think about Bitcoin has really changed. Both experts and fans are starting to see it not just as something to gamble on, but as a serious part of a smart investment plan.

A lot of people are holding onto their Bitcoin for longer instead of quickly trading it, showing they believe in it for the long haul. This shift is a big deal because it shows Bitcoin is becoming more than just a high-tech fad—it's turning into a kind of money that offers more freedom in how you use it.

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