The chill of crypto winter has fallen on most investors, companies and coins for the past year. However, given Bitcoin's recent surge above $37,000, some think the cold market conditions are finally easing.
On Wall Street, bull markets occur when a major stock market index, such as the S&P 500 or the Nasdaq Composite, rallies over a period of time. As a technical rule, bull markets are defined by a 20% rise from the asset's low.
Coined by an industry still in its infancy, crypto winter is less of a technical term and more of a buzzword, perhaps drawing inspiration from House Stark's warning motto in the HBO series “Game of Thrones”: Winter is coming.
Being a new asset class comes with volatility, which is why the Wall Street lens may not work for crypto. Despite a 77% increase in the total value of the crypto market from $823 billion last December, questions about whether the freeze has thawed have increased to $1.4 trillion as of Friday, according to CoinGecko.
Given crypto's recent pop and influx of more than $1 billion into crypto investment products this year, CoinShares head of research James Butterfill told Decrypto: “We've got hard numbers from flows and prices that suggest we're out of the winter.”
However, Butterfill and other experts in the industry say they see anecdotal evidence that an extended bear market is giving way. Butterfill is competing with CoinShares' customer demand in 2021, but Steven Lubka, Head of Private Client Services at Bitcoin Financial Services Swan, told Decrypt that there is more demand than what we've seen now.
“He's never been so busy,” Lubka said. There is a long stream of people allocating capital and moving money over the next couple of months.
In particular, Lubka has seen changes in Swan's prospective clientele. Described by Lubka as “a level out of the professional class,” Swann has recently held talks with former CEOs, financiers and entrepreneurs about Bitcoin exposure.
“Doctor, lawyer, accountant – these people are still here,” said Lubka. “This year, ‘I'm a former CEO. I own this entire company.
In general, the recent influx of interest has come from older, later career and financially savvy people, Lubka said. Some have cited Bitcoin's recent rally and the potential of Bitcoin ETFs as “space to gain.”
The crypto markets are swelling in anticipation of a Bitcoin ETF, which will allow financial institutions to more easily allocate capital to the coin, some analysts, such as Amberdata's Director of Derivatives Greg Magadini, said that crypto is still too early.
Crypto winter will definitely not end until Bitcoin and Ethereum currencies are approved in the US, which resources have described as a crucial development to enter the space.
“This is a floodgate for large portfolios to allocate 50 basis points to Bitcoin,” for example, he said. “For me, that would basically be the catalyst to open up. […] The end of crypto winter.
Edited by Stacy Elliott.
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