While some near-term pricing correction is likely to be expected, analysts who spoke to CoinDesk said bitcoinâ€™s latest rally will be more sustainable for the long term compared with 2017, the last time bitcoinâ€™s price hit an all-time high.
One difference from the last bull run? The current market has gained support from a new wave of institutional investors mainly based in North America.
â€œYou could look at the timing of the rally, which coincided with typical U.S. market open hours,â€ said John Todaro, director of institutional research at cryptocurrency analysis firm TradeBlock. He added that volumes at LMAX Digital, which primarily caters to institutional traders, are also higher.
Bitcoinâ€™s price broke its previous all-time high earlier Monday, according to CoinDeskâ€™s BPI, setting a new record at $19,850.11.
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â€œDuring the thinly traded Thanksgiving holiday, regulation concerns, which were outlined by Coinbase CEO Brian Armstrong in a series of tweets, caused the asset to correct, declining to around $16,500 â€“ during a time when a large number of U.S. institutional investors and traders were not actively transacting,â€ Todaro said. â€œToday, Monday morning, you had a large return of institutional traders who bid up the asset, buying the dip.â€
To be sure, not all the data for the worldâ€™s oldest cryptocurrency is bullish for the near term. Bitcoinâ€™s inflow to exchanges has exceeded outflows since the Thanksgiving sell-off, according to data provider CryptoQuant.
That on-chain metric could indicate a short-term bearish trend, sending bitcoin back to a level of around $16,000, said Ki Yong Ju, chief executive officer of CryptoQuant. Thatâ€™s because it means large bitcoin buyers, or whales, seem to be active on exchanges, adding more selling pressure.
Nonetheless, the activity is another sign this market isnâ€™t what it was three years ago. After hitting its former record in December 2017, bitcoinâ€™s price quickly dropped to as low as $5,947.40 in just about two months. At the time, the market widely attributed bitcoinâ€™s rally to an increase in active retail investors.
Until very recently, the term â€œinstitutional investorsâ€ in the crypto worldÂ meant an assortment of crypto quant firms, bitcoin miners and early investors. The composition of market participants has gradually changed this year to include a new group considered institutional investors by the traditional financial world, according to Denis Vinokourov, head of research at digital asset prime broker Bequant.
Ongoing capital inflows into the Grayscale Bitcoin Trust and other exchange-traded products (ETPs) issuers, including 21Shares and CoinShares, are evidence the institutions in traditional financial markets are pouring money into bitcoin, Vinokourov said.
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Grayscale is owned by Digital Currency Group, which is also the parent company of CoinDesk.
â€œThe long-only aspect has partly caused the surge higher and, in turn, attracted the momentum-driven investing that tends to push bullish rallies even higher,â€ Vinokourov said.