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Crypto Investments Are Surging: Where Is The Money Coming From?

Investor confidence in crypto assets is undoubtedly on the rise. The year 2020 started with a subdued market capitalization of a little more than 190 billion US dollars in all crypto assets combined. Riding on the back of Bitcoin’s astounding bull run, the market has now reached a volume of more than 1 trillion US dollars in combined capitalization. A large chunk of this market is occupied by Bitcoin, the oldest and the most widely known cryptocurrency with a current market capitalization of more than 690 billion US dollars. Exceeding most of the analyst expectations, the price of Bitcoin comfortably crossed the mark of 41,000 US Dollars

The Most Influential Investor Segment

The rise in Bitcoin’s dominance over the market is driven by a curious set of investors that includes new passionate individual investors and institutional hedge funds craving high returns. Nearly 12 million Bitcoin transfers into personal wallets, with less than US$ 1,000 in amount, have been recorded so far in 2020. This indicates a significant rise in the volume of individual investors. In 2017, this number was around 9 million. It implies that more than 3 million new small-scale investors took part in this year’s Bitcoin rally. 

A further deep-dive into this set of individual investors indicates a strong inclination of young people, especially the millennials, towards Bitcoin investment and other types of crypto assets in general. Surveys conducted in 2019 showed that people aged between 18 and 34 were three times more aware of Bitcoin compared to people aged over 65 and two times more aware compared to people aged between 50 and 64. 

Nearly 60% of the millennial population holds a positive outlook on Bitcoin. This was twice the population of Bitcoin-enthusiasts among the age group of 35 to 44 and thrice as enthusiastic as the people aged above 60 years. 

Multiple reasons drive young people to invest in Bitcoin. Other than the two years of 2014 and 2018, the annual returns on Bitcoin investment were far higher than conventional stock returns. The magnitude of returns in at least a couple of years went above 1,000%. In 2013 the returns were as high as more than 5,500%.

It’s About More Than Trading

As more crypto investors find their way to this industry, the platforms facilitating investments need to adapt accordingly. It is no longer sufficient to just let users buy, sell, and trade top crypto-assets. Instead, the overall experience requires streamlining and accessibility, as well as a way to diversify a portfolio with ease. 

Several companies try to cater to their users’ needs. OKEX has a customizable platform with multiple features to explore. Binance is well-known for providing instant trading across a wide range of crypto assets, including Bitcoin, Ethereum, LINK, and others. All these companies bet big on mobile and desktop experiences, as those will usher in the next wave of investors. 

Kraken, on the other hand, tries to focus on compliance and healthy banking relationships. A valid approach, as financial institutions are known for shunning cryptocurrency companies, even in 2021. 

Each more or less successful exchange has its own distinctive features: Binance is loved for its scale, Kraken – for original technological solutions, Binaryx – for usability and design, but it is important to note that all these exchanges provide not just a trading terminal, but also an opportunity to study, follow the news, trade, exchange and store cryptocurrency in one place. 5-7 years ago, no one could have imagined such an infrastructure for crypto enthusiasts. In addition to the convenience of old users, this allows to attract even more new adopters and simplify their acquaintance with the world of digital assets.

The Future of Crypto Investing

In the days to come, institutional investors will also increase their share in crypto-assets and worldwide crypto trading activities. Institutional buy-ins and institutional investors keen to hedge against conventional paper currency have already been active in driving a Bitcoin upsurge. It will add the influence of the retail payment services like Paypal and Square in making crypto transactions more rampant and convenient. The recent decision of PayPal to allow crypto-payments for its users and 26 million merchants is already a step towards that direction. Riding on such positive market perceptions, investments in crypto assets will only grow in the days to come.

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Mohamad Ahmad