This week in Bitcoin price: Dec 29 - Jan 4

After reaching record highs of more than $34,000, Bitcoin doubled back and now hovers in the $30-32,000 range. Bitcoin’s price has surged this week alongside increasing mainstream interest and institutional investment in the emerging asset. 

Published on January 4th, 2020

The big picture

Just after 2020 rolled into 2021, Bitcoin’s months-long rally saw it’s biggest spike yet — hitting a new all-time high of $34,500 on January 3. Since the peak, prices settled closer to the $30,000 mark, but the post-New Year’s bounce was big enough to make headlines in mainstream press around the world, including a front-page piece in the Financial Times, which noted that “cryptocurrency’s gains far outpaced mainstream asset classes in 2020.” The article also covered a trend we’ve seen for months now of Wall Street and major international financial institutions making investments in the emerging asset. But questions remain — will prices keep climbing, or will institutional investors sell and reap profits?

Key points

That trend — increased interest from banks, hedge funds, tech companies, and other institutional investors — is a major difference between 2017’s Bitcoin bull run and the one we’re seeing now.  And it seems to be continuing in 2021, with news around institutional investment continuing to break. 

  • New York-based hedge fund Skybridge Capital now has Bitcoin holdings of around $182 million, according to an investment deck seen by The Block.

  • Fund manager Van Eck, also based in New York, refiled with the SEC for approval for a Bitcoin ETF (or exchange-traded fund). A Bitcoin ETF would function much like a Gold ETF, which allows investors to get exposure to the asset (by buying shares in a fund) without having to hold it themselves.

  • December was the second-biggest month ever for Bitcoin on-chain volumes, with the network tallying transactions that add up to more than $189 billion. 

  • According to Google Trends, global search interest for Bitcoin is reaching highs not seen since February 2018.

  • In other news, USA Today reports that Carolina Panthers offensive tackle Russell Okung is the first NFL player to receive part of his salary in Bitcoin. According to Okung, "No one entity owns it or controls it.. Bitcoin is undermining the status quo of intermediaries: no more banks, no more money managers, no more governments telling you what you can and can’t do with your money."

Spotlight: Bitcoin assists civil-rights protests in Nigeria

Quartz reports on Bitcoin’s role in empowering some of the largest protests Nigeria has seen in a generation. The country is a major African tech hub with a young, internet-savvy population. After protest groups’ bank accounts were disrupted, they turned to Bitcoin for fundraising. Nigeria is becoming one of the continent’s leaders in Bitcoin adoption

Bitcoin vs. the dollar

As highlighted on CNBC this week, Bitcoin and the U.S. dollar took very different paths in 2020: “It’s a tale of two charts, but the trends tell similar stories. The dollar is hitting more than two-year lows while bitcoin breaks to new records.” As Bitcoin has reached record highs, the dollar index (which tracks the value of a dollar against a basket of other major currencies such as the euro) has plunged to multi-year lows.

Bitcoin vs. gold

Bitcoin is often referred to as “digital gold,” because investors see similarities between the two asset classes in terms of their limited supply and resistance to inflation. But over the last year some analysts have noted competition between gold and Bitcoin in the eyes of some institutional investors. Last month, JPMorgan predicted that major investors will increasingly buy Bitcoin at the expense of gold: “The adoption of bitcoin by institutional investors has only begun, while for gold its adoption by institutional investors is very advanced.” This week, the Bitcoin-to-gold ratio reached record highs: while one Bitcoin could buy around five ounces of gold at the beginning of 2020, today one Bitcoin could buy over 15 ounces.

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