“ Bitcoin Rate of Return Each Market Cycle (Each cycle had a 20% return of the previous cycle. 2011: Return of 318,864% = $31.90 High; 2014: Return of 58,474% = $1,177.19 High, 2017: Return of 11,960%=$19,764.51 High, 2022: Potential Return of 2,392%=$78,500.00 Potential High).”
While the last value may look a bit unrealistic, it’s achievable; not by things to come but by efforts that have already started taking shape.
There is a Shift from Retail to Institutional
As a fact, the Bitcoin and the general cryptocurrency market has mostly been driven by retail crypto traders or investors. This is changing. Institutions are slowly but steadily creeping into the industry and with them comes large sacks full of investment funds.
It’s not gossip. In mid-February 2019, Virginia’s Police Officer’s Retirement System in the Fairfax county in the United States, joined another public pension fund, Employee’s Retirement System and invested a chunk of the 40 million U.S dollars Morgan Creek’s crypto fund.
Additionally, Grayscale, a virtual currency manager, saw institutions pour a record 1.5 billion U.S dollars into the fund. This year, as recorded in its Q1 report, 99 percent of its institutional clients were interested in Bitcoin. Michael Sonnenshein, a managing director at the firm made observations, saying:
“ “The conversations we are having are not Bitcoin 101 or even Bitcoin 201. They are conversations about use-cases. These are people who make decision around data. They are looking at transaction growth, scaling solutions, the number of nodes. And they are really diving into those metrics. And using them for a barometer to gauge the health of a given asset. Investors are coming to the table so much better informed and that level of understanding is so much deeper.”
PricewaterhouseCoopers, a global professional services company, in its report, noted that institutions had been pouring funds into hedge funds during last year’s bear market.
The Impact of a Bitcoin ETF
The United States Securities and Exchange Commission and its Japanese counterpart are gearing towards allowing a Bitcoin exchange-traded fund.
Approving a Bitcoin ETF will be a sign of maturity indicating that Bitcoin is ready for mass consumption, especially for wealthy and institutional investors. As the CEO of Abra, a crypto startup, Bill Barhydt, puts it: “once that happens, all hell will break loose. Once the floodgates are opened, they’re opened.”
Bakkt Bitcoin Futures
On May 13, Bakkt, a Bitcoin futures exchange, tweeted:
“ Today we’re pleased to update you on the launch of Bitcoin futures contracts developed by Bakkt in collaboration with ICE Futures U.S and ICE Clear U.S.”
The exchange added that they have set the user acceptance testing (UAT) date to be in July. Although the Commodities Futures Trading Commission (CFTC) has not given a clear green light, Bakkt will let the CFTC supervise the process of self-custody by Bakkt. Notably, instead of delivering the cash equivalent at the end of the contract, the exchange will provide Bitcoin.
Halving, which is a hardcoded on the Bitcoin blockchain, will occur towards the end of May-2022. While it is only miners’ rewards that will be slashed by half – from 12.5 BTC to 6.25 BTC- the price will scale up, if historical price action holds.
In the past two halving events, the price of Bitcoin always recorded massive gains. For instance, twelve months after Bitcoin underwent the cut in 2012, BTC reached $1,000, a record price by then. After the second halving in 2016, BTC finished 2017 exchanging hands at $20,000.
While commenting on Rager’s post, a tweeter user noted:
“ I will incredibly get rich if this happened, but it won’t. It would be much higher. 75% of all money coming in on the prior rounds was retail. 75% of the next round will be institutional. This would be an S-curve and go well over $250K with ETF and halving.”
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