Bitcoin Price Hits All-Time High Above $22,000: Here's What Happened

Bitcoin zoomed past $20,000 to close above $21,000, a new all-time high for the benchmark cryptocurrency. It even breached $22,000 before retreating to the $21,000 level.

Since retreating to the $18,000 level last Friday, Bitcoin flipped one resistance after another to finally have enough volume to reach a new-all time high price Thursday, closing at $21,359 on Coinbase. This puts Bitcoin up 450% from its lowest point in March and up 190% since the beginning of the year.

Comparisons to the previous bull run last 2017 were made, and analysts came to the conclusion that the rally this year is different.

While 2017 was characterized by retail speculation, institutional investors are at the forefront of the 2020 rally. Around the time of the Bitcoin halving in May, which reduced the issuance of Bitcoin supply every day to just 900 BTC, legendary hedge fund manager Paul Tudor Jones announced he invested 1% of his assets into Bitcoin. At the time, he called it the “fastest horse” and said it reminded him of gold in the '70s.

Around August, billion-dollar company MicroStrategy announced it invested $250 million into Bitcoin. CEO Michael Saylor said it was a decision they made based on the confluence of macro-economic factors like COVID-19, fiscal stimulus and global economic uncertainty.

This was followed by Square putting $50 million of its reserves into Bitcoin. The company even published a whitepaper detailing how they purchased that many Bitcoins without causing price spikes.

When PayPal announced it will allow the buying and selling of cryptocurrency, a couple of traditional investment firms soon announced their allocating of funds to Bitcoin. These include 169-year-old company MassMutual and U.K’s Ruffer Investment company.

Another likely factor in the increase in price is the fact that more holders today are not holding to turn a quick profit. According to Chainalysis, 77% of all Bitcoin wallets today are illiquid, meaning it only sends 25% of the Bitcoins they’ve ever received.

“This leaves a pool of just 3.4 million Bitcoin readily available to buyers as demand increases,” the intelligence firm added.