The deleterious effect that the coronavirus pandemic injected into the global economy has prompted many investors to set their sights on Bitcoin as a "flight-to-safety" asset. Cryptocurrency exchange platforms have reported very health trading volumes since the middle of March, and they have also compiled enough data to determine how trading behavior is evolving.
According to Jesse Powell, CEO of the Kraken exchange, quite a few retail investors began flooding the market following the crash of both Wall Street and cryptocurrencies. Hedge fund managers were likely waiting on the sidelines; this much can be ascertained by the high number of positions taken when Bitcoin dipped all the way below $4,000 on March 12.
The rally that took Bitcoin from $3,600 to more than $9,000 was likely driven by hedge fund managers placing heavy bets on the world's most valuable digital currency. Demand for Bitcoin has been very healthy since March, and it has brought a welcoming feeling of stability to the cryptocurrency markets. In an interview with Bloomberg, Powell mentioned that he believes some American traders have chosen to invest their stimulus checks; this is something that has been experienced in retail trading platforms such as Robinhood and E*TRADE.
While most hedge fund managers initially dabbled in Bitcoin as a means to deal with an inflationary outlook, current trading behavior suggests that greater portfolio allocations are taking place. At a time when Wall Street is looking shaky and very dubious, institutional investors are starting to see Bitcoin as an investment commodity similar to gold and silver.
It remains to be seen whether the ongoing enthusiasm and demand for Bitcoin will help push this token closer to $10,000 and long enough to establish a solid support level. Even though the cryptocurrency market has stabilized considerably in 2020, day trading action continues to be a concern. As soon as Bitcoin looks like it will touch $10,000, active traders swoop in to close their positions and reap profits; however, the longer this cycle continues to repeat itself, the less relevant it will be in terms of putting bearish pressure on Bitcoin exchange transactions.