This week in Bitcoin price: Dec 15-21

Bitcoin cracked the $20,000 barrier on its way to a new all-time high. Meanwhile, institutional investors from Wall Street and beyond continued to make moves into the space. All that and more in the latest edition of our weekly report. 

Published on December 21st, 2020

The big picture

In one of the biggest weeks in Bitcoin’s nearly 11-year history, prices raced past all-time highs after leveling off last week. They not only cracked the previously untouched $20,000 mark but remained closer to $25,000 than $20,000 for the second half of the week. We also saw the other major Bitcoin story of the season continue to unfold with additional large scale institutional investment from funds around the world. So the big question we’re left with going into the holidays is what happens next? 

Key points

With the total crypto market cap now sitting at $649 billion, a growing number of big-money investors are taking a look. Here are some more of the week’s biggest headlines.

  • According to Scott Minerd, CIO of Guggenheim Investments — which recently announced its intention to buy as much as $500 million in Bitcoin — even at $20,000-plus, the cryptocurrency may still be undervalued. As Bloomberg described Minerd's view: “Bitcoin’s scarcity combined with ‘rampant money printing’ by the Federal Reserve means the digital token should eventually climb.”

  • This week we learned that London-based Ruffer Investment allocated 2.5 percent of its $20 billion total assets under management to Bitcoin, giving the firm Bitcoin holdings worth around $740 million. As Ruffer wrote in a shareholder update reported by Coindesk: “We see this as a small but potent insurance policy against the continuing devaluation of the world's major currencies."

  • Ruffer is also an investor in crypto-investment fund One River Digital Asset Management. According to Bloomberg, One River “has commitments that will bring its holdings of Bitcoin and Ether to about $1 billion as of early 2021.”

  • We’ve been seeing major funds seeking crypto-native partners for both the execution of their trades and the secure custody of their holdings. Coinbase was the partner chosen by One River.

  • Financial Times columnist Izabella Kaminska, a longtime Bitcoin skeptic, notes the institutional adoption: “It is no longer possible to deny [Bitcoin’s] overall resilience. And since resilience was always a part of Bitcoin’s raison d’etre, that’s an important win for the would-be challenger system. All the more so if you consider that institutional money feels it can no longer afford to ignore it.”

Measuring institutional interest

As an indicator of rising institutional investment, “open interest” for Bitcoin on the Chicago Mercantile Exchange (CME) reached an all-time high of more than $1.4 billion this week. (Open interest just refers to futures contracts or similar deals that have been made but not yet executed.)  According to Bloomberg, the fast-expanding Bitcoin futures market on the CME is a key intersection of crypto-finance and traditional finance: “Open interest has tripled this year, making it easier for investors to trade in the market.

Spotlight: Bitcoin nodes

According to a network sample by Bitnodes.io, a tool that measures the size of the Bitcoin network, the total number of Bitcoin nodes is nearing all-time highs. Nodes are the computers on the Bitcoin network that are responsible for recording and validating transactions – each node stores an entire copy of the blockchain. This is a key indicator of both the health of the blockchain and its ability to function as a truly borderless monetary network. With thousands of nodes distributed throughout the world, it becomes essentially impossible for any outside force to shut down the network.  Nodes are now distributed across at least 96 countries. (On Monday, financial reporter Ed van Der Welt explained he set up a Bitcoin node on Bloomberg TV.)

Social trends

Although Bitcoin prices trended upward throughout the fall,  social media engagement lagged far behind the 2017 bull run. This week, however, tweet volume hit its highest level in three years. On December 17th, tweet volume about Bitcoin surpassed 100,000 — just shy of its record of 135,000 set in January 2018 according to The TIE.

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