Will 2022 be another bull market for cryptocurrencies?
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By Anna J. Park
Bitcoin is rallying again, surpassing the $48,000 mark for the first time since last December.
Global financial institutions' participation in the coin's trading, together with Russia's alleged move to accept bitcoin for its oil and gas exports, are fueling the rise.
According to CoinDesk, bitcoin was being traded at $47,355.27, as of Tuesday 12:50 p.m. Korea time, which is a 0.72-percent increase from 24 hours earlier. It once traded at $48,201.75 during the previous 24 hours, surpassing $48,000 for the first time since Dec. 31.
Ethereum, a representative altcoin, or cryptocurrency other than bitcoin, is being traded at $3,373.18, which is a 1.86-percent increase from 24 hours ago. During the past week alone, bitcoin and ethereum rose by more than 15 percent and 16.4 percent, respectively.
Investor sentiment towards the cryptocurrencies has also risen this week. As of Tuesday afternoon Korea time, crypto-data company Alternative's “Fear & Greed Index for bitcoin and other large cryptocurrencies” stood at 56, which puts the cryptocurrencies in the “greed” category. The number was 60 the previous day, showing coin investors' aggressive optimism about the future prices of the coins.
It is the first time since last November that the index has pointed to the “greed” level. Only last week, the figure stood at 26, falling into the “fear” category. In just less than a week, the market sentiment transformed from fear to greed, without resting in a neutral stage for long.
“The $BTC pattern is called an ascending triangle,” Peter Brandt, a famed futures trader based in the U.S., tweeted earlier this week, hinting that an additional 30-percent increase could be possible according to the current pattern.
He explained that a similar pattern structure in 2019 was followed by a short-term 20-percent jump as well as a 50-percent increase. Yet, he added, “Charts do not predict the future. Charts suggest possibilities and are useful in managing the risks in a trading program.”
Institutional investors' active participation in coin trading market
Behind the current rally of the digital assets is global financial institutions' active participation in the coin trading market, experts say. Last week, Goldman Sachs kicked off over-the-counter crypto transactions, the first major bank in the U.S. to do so.
“This is an important development in our digital assets capabilities and for the broader evolution of the asset class,” Max Minton, the Asia Pacific head of digital assets at Goldman, said at Barron's.
Although specific details about the market participants and nature of the trades are not known, the bank confirmed that the over-the-counter market covers bitcoin derivative products, such as the bitcoin non-deliverable option.
“The investor sentiment towards bitcoin has improved since global investment banks launched derivative products,” said Lee Jae-sun, an analyst at Hana Financial Investment.
Blackrock, the world's largest asset management firm, also said recently that it seeks to explore digital currencies to offer more varied services for clients. Blackrock CEO Larry Fink confirmed the position in his letter to shareholders last week.
According to a recent survey by U.S.-based investment bank Brown Brothers Harriman, 54 percent of institutional investors are considering expanding their investments into digital asset-related exchange-traded funds (ETFs). Against the backdrop of institutional investors increasing their acceptance of coin assets, local financial groups are strengthening investment partnerships and joint ventures with blockchain companies and cryptocurrency funds.