Cameron Winklevoss, the billionaire founder of cryptocurrency exchange Gemini, believes the next Bitcoin (BTC) bull run will be much different. When compared to previous bull markets, Winklevoss noted that there is substantially more capital, infrastructure, and better projects.
“The next Bitcoin bull run will be dramatically different. Today, there’s exponentially more capital, human capital, infrastructure, and high-quality projects than in 2017. Not to mention the very real specter of inflation that all fiat regimes face going forward. Buckle up!”
Various data points hint at a significant increase in the amount of capital held by investors in the cryptocurrency market. Major cryptocurrency exchanges have also received more regulatory clarity, improving the infrastructure of the market.
Capital flows into the Bitcoin market
Two metrics primarily show that more money could be involved in the latest Bitcoin rally. First, the market capitalization of Tether (USDT) has surpassed $10 billion. Second, the assets under management (AUM) by Grayscale Investments recently achieved a new high.
Tether (USDT) market capitalization hits $10 billion. Source: CoinMarketCap
To date, Tether is the biggest stablecoin in the cryptocurrency market. Investors, especially in countries with regulatory uncertainty, rely on the stablecoin to trade crypto assets. A rapid rise in the market cap of Tether could indicate more money is waiting to deploy on crypto exchanges.
Grayscale’s crypto-asset trusts are arguably the most widely-utilized investment vehicles by institutions to gain exposure to cryptocurrencies. Within the last quarter, the assets under management in Grayscale’s suite of products hit an all-time high at $5.1 billion.
Grayscale AUM reached $5.1 billion. Source: Grayscale
Grayscale CEO Barry Silbert said:
“In 2013, everybody thought we were crazy for launching a Bitcoin investment fund. Well, look at us now…”
The confluence of Tether’s market cap and Grayscale’s ballooning assets under management shows that capital held by institutions and retail traders continues to increase substantially.
Crypto market infrastructure is improving
In 2020, exchanges and banks in the U.S. primarily saw regulatory clarity regarding cryptocurrencies.
The Office of the Comptroller of the Currency of the U.S. (OCC) allows banks to provide and operate crypto custodial solutions. It is essentially a green light for financial institutions in the U.S. to get involved in the cryptocurrency market.
JPMorgan is also reported to have accepted Gemini and Coinbase, two of the largest spot exchanges in the U.S., as clients. Through this, the fear of strained banking relationships affecting exchanges and users has subsided.
Clarity around cryptocurrencies by major U.S. regulators and banks could improve the perception of the asset class by the mainstream. This means if Bitcoin approaches a new bull market, the improved sentiment around the entire industry could benefit BTC adoption and its value.
Crypto startups are finding relevant use cases
Overall, projects and companies in both the Bitcoin and crypto markets are seemingly increasing in quality. This is partially due to increased regulatory clarity and the fact that more traditional firms are willing to collaborate with crypto firms.
As an example, Bitcoin Lightning startup Zap is working with Visa and has participated in its Fintech Fast Track Program. This allows Zap to launch Visa cards as a part of the partnership.
Zap CEO Jack Mallers said:
“We're contractually obligated to launch one in the next 12 months and we plan on launching one in the next few months.”
Better projects, increased capital, and improving infrastructure are resulting in boosted confidence levels among Bitcoin investors and this is raising sentiment across the entire sector. In the medium-term, high-profile investors are hopeful BTC would reflect these factors.
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