Skeptics have dismissed the massive runup in Bitcoin over the past two months as another example of rampant retail trader speculation that is bound to end in tears.
Driving the news: The cryptocurrency jumped from around $14,000 per coin on Nov. 3 ($10,500 as recently as Oct. 3) to more than $34,000 on Sunday, then dipped by $5,000 overnight. But this time really is different.
What’s happening: This time it’s the institutional investors who have FOMO.
- Big names like JPMorgan, Guggenheim, FundStrat’s Tom Lee, hedge fund legend Paul Tudor Jones and 169-year-old insurance giant MassMutual have recently given their seals of approval, betting hundreds of millions of dollars on Bitcoin’s upward trajectory and publicly touting price targets of $400,000 a coin.
- Further, involvement from Square, PayPal and Visa, which reportedly is "actively working with over 25 digital currency companies on a variety of bitcoin-related products and services,” are providing a use case for the cryptocurrency.
I don’t care what is driving it. I only care that it is volatile, and that is good for me. One parameter I now look at every day is the Crypto market cap. It was $420bn when I first got interested in May 2020. Now it is $920bn. Because the entire market has more than doubled its capitalisation, and because BTC retains its market dominance, it is not surprising it has risen so far and so fast. Now my attention has turned to “is my exit strategy appropriate for the real market expected in 2021”, rather than “is investing in Crypto profitable?” That is a nice problem to have.
May I ask why only in May you were interested? Is that because of the moves up off the March lows?
No. It was a chance conversation with one of my son’s friends before I realized that crypto currencies were an asset class.
I wonder, however, whether this rally is a bubble or it will stabilize at a high level.
It is surely showing some high volatility and as of today, Bitcoin has reached about 38,900 USD. Who knows where it goes from here.
I think up, and then down, and up again, and then down again. 
The Twiitersphere is suggesting another huge correction down below $30k level. Maybe $22-24k.
But you’ve got a little (a lot?) institutional money flowing in now. Long term it’s looking exciting…
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It’s a bit of a self-fulfilling prophecy - people hear they can profit from it and invest, which drives the price up, leading to more people investing.