Bitcoin is trying to bounce back after a 30% plus correction from all-time highs. The flagship cryptocurrency has been in consolidation mode after plunging from record highs of $42,000 to two weeks of lows of around $30,000. The bounce back is being fuelled by capital inflows from traders who missed out on the initial rally to record highs.
According to Glassnode co-founder and CTO Rafael Schultze, cash inflows into bitcoin have reached record highs of $70 billion, equaling Bitcoin whole market cap four years ago. A good chunk of the new capital has come from institutional investors who are increasingly taking positions to profit from Bitcoin’s meteoric rally.
While retail investors are accredited for fuelling Bitcoin rally to $20,000, a rally to $42,000 is believed to have been fuelled by increased institutional investments. In the last few weeks, institutional investors have pumped billions of dollars into Bitcoin either as a hedge against monetary inflation or a reserve asset.
Likewise, there is growing chatter that Bitcoin bounce back to record highs of $42,000 would be sustained by increased corporate or institutional involvement. Bitcoin market cap crossing the $1 trillion market has all but affirmed it is no longer a fad but a digital asset here to stay.
The bitcoin price surge has coincided with record outflows from gold products that remain under pressure. Investors shrugging gold is one of the catalysts behind massive inflows into Bitcoin, touted as gold 2.0. People are increasingly investing in Bitcoin because of its scarcity.
The pumping of trillions of dollars into the economy in the form of stimulus packages has also aroused concerns about inflation. Similarly, people are increasingly buying Bitcoin as a hedge against elevated inflation levels.
Increased Bitcoin investments have also coincided with an uptick in Google searches for the flagship cryptocurrency. While Bitcoin’s Google searches are yet to reach levels seen in 2017 in the U.S, it is a different ball game in other countries.
Bitcoin searches are on a roll, mostly in countries where people are wary of the government printing press that continues to fuel inflation levels. Countries such as Argentina are experiencing an uptick in Bitcoin searches as people remain wary of economic contraction reeling from high inflation, price depreciation, and high debt levels.
South Africa Bitcoin Ponzi Scheme
Amid a surge in Bitcoin interest so have illegal activities surged as bad actors look to dupe unsuspecting people. South Africa’s Financial Sector Conduct Authority has had to ramp up regulation to counter a surge of fraudulent crypto dealings.
The watchdog is preparing a slate of new proposals to better regulate the trading of various cryptocurrencies in the wake of reports that a Bitcoin trader ran one of the country’s biggest Ponzi schemes. The Bitcoin trader is believed to have duped 260,000 clients a total of 23,000 Bitcoins worth over $700 million at current BTC price of more than $32,000.
Mirror Trading International Ltd is the company in question who’s CEO; Johann Steynberg is believed to have fled to Brazil with millions of dollars’ worth of BTC. The company did not keep any accounting or customer records, making it difficult to determine who lost what amount.