Bitcoin (BTC) has risen more than 10% this past week, extending gains and reaching levels not seen since the Terra crash in May 2022. The surge has been attributed to increased institutional activity, particularly in the United States.
Average Bitcoin Transaction Size Rises on U.S. Exchanges
Kaiko data from December 5 showed that the average transaction size on US exchanges such as Coinbase, Bitstamp and Kraken has risen rapidly since September 2023. If this data is instructive, it shows that institutions are making larger block trades and doubling down on Bitcoin.
The increase in average trade size coincides with the expected approval of the first Bitcoin ETFs in the United States. In the coming weeks, the U.S. Securities and Exchange Commission (SEC) will rule on multiple Bitcoin ETF applications, including those filed by BlackRock and Fidelity. Analysts predict that the SEC will approve multiple derivatives by early in the first quarter of 2024.
Analysts believe that the rise of spot Bitcoin ETFs is an important catalyst for institutional adoption of Bitcoin and cryptocurrencies, validating Bitcoin as a new asset class. Authorizing these complex derivatives will provide institutions with a regulated and accessible way to invest in Bitcoin, thereby reducing the barriers that previously hindered them.
Monetary policy shift, reduced volatility drive Bitcoin demand
In addition to ETF expectations, an improving risk environment has also contributed to Bitcoin's rise. The U.S. dollar has been weakening over the past few months. At the same time, risk-free rates have stabilized, making Bitcoin a more attractive investment.
Bitcoin and crypto assets plunged last year as the Federal Reserve steadily raised interest rates to curb rising inflation, which had surged to record levels. In a shift in monetary policy, the central bank paused rate hikes as inflation fell.
However, any change from the current dovish state could have a significant impact on Bitcoin and cryptocurrencies, potentially leading to a shift toward risk-free Treasuries and the U.S. dollar.
As Bitcoin surges to a new 2023 high above $42,000, its risk-adjusted returns relative to other traditional asset classes are showing its superiority. Kaiko noted that Bitcoin’s Sharpe Ratio exceeds that of gold, tech stocks, and indices such as Tesla and Nasdaq.
The blockchain analytics platform also noted that Bitcoin volatility, as measured by the Sharpe ratio, which shows the returns investors receive when volatility is taken into account, is at multi-year lows, supporting Bitcoin. Generally, lower volatility makes the asset, in this case Bitcoin, a less risky investment. This, in turn, makes it more attractive to institutions, which could consider diversifying into it. #机构 Bitcoin #价格推动
