Bitcoin prices have hit new heights lately, and the fundamental momentum of tighter supply and increased demand has underpinned that surge, according to a report from London-based crypto administrator Copper.co.
Copper claimed that the recent price hike is a function of the ever-increasing demand for bitcoin’s BTCUSD (-0.14%) and the growing scarcity of the asset with a maximum supply of 21 million expected to be reached by 2140. The researcher The greatest interest in new bitcoins comes from North America and especially from the US.
According to CoinMarketCap.com, roughly 18.625 million bitcoins have been created or, in parlance, digitally mined by cryptocurrency enthusiasts, but a good chunk of that has been lost, the folks at Copper wrote.
According to their estimates, 56% of bitcoins are owned by investors, 18% are lost, 15% are held by so-called traders and the rest still has to be mined (see attached graphic):
Copper said that with the majority of investors being long-term owners, representing eight out of ten cryptocurrency holders, an increasing appetite for the world’s most popular digital asset can have an oversized effect on values.
The researchers said the $ 40,000 rise in Bitcoin was already in the game even before Tesla Inc. TSLA, -5.26%, filed its surprise filing with regulators on Monday and its $ 1.5 billion investment -Dollar in Bitcoin and explained its decision to eventually allow customers to purchase products using Bitcoin.
“Data shows that new investors have pushed prices much higher in the EU
last six months of 2020, north of 2 to purchase [million] Bitcoins, ”wrote the Copper researchers in the study.
“In order to be able to buy Bitcoin in such large quantities, the price rose
well above the $ 20,000 mark that helped convince early investors
sell their cryptocurrency above its all-time high, ”they said.
According to the report, the crypto market is dependent on a new supply of around 3.2 million Bitcoins on exchanges held by traders.
The study also found that investors who have owned at least 1,000 bitcoins for about three months increased their holdings by 173% in 2020.
This rising demand coupled with this limited supply helped push Bitcoin values to a total market value of around $ 800 billion, and Copper said the main driver of demand was North American buyers who sourced the supply from Asian miners .
“The price increase is the result of a demand and liquidity crisis
happened in early 2020 when outflows from exchanges – that is,
Bitcoins placed in self-custody have increased significantly, ”the company’s investigation found.
Copper also made an interesting finding, noting that nearly a third of Bitcoin trading volume occurs during the time the New York Stock Exchange is open and that investors are looking to trading the Dow Jones Industrial Average DJIA (+ 0 , 20%) and the S&P 500 should focus on index SPX, -0.03%.
That so much bitcoin trading occurs during trading hours between 9:30 a.m. and 4:00 p.m. Eastern could explain why S&P 500 movements are sometimes viewed as correlated with Bitcoin prices, Copper wrote.