Hedge funds, retail investors bought into the price drop – Kraken CEO says

 

According to the CEO of the Kraken Cryptcoin Exchange, Jesse Powell, there has been a massive influx of new accounts from all kinds of investors. This trend coincides with the strong recovery of Bitcoin (BTC) from $3,600 to over $9,000.

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Powell’s statement aligns with similar observations made by Coinbase earlier this year, when the exchange also experienced an increase in demand, as the price of Bitcoin fell to $3,596 on March 12.

Coinbase observed a strong demand in March

The data shows that demand from retail and institutional investors has steadily increased since mid-March and sentiment among Bitcoin investors has improved.

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What does the influx of new investors mean?
Talking to Bloomberg, Powell said:

„We’ve seen a massive influx of new hedge fund accounts, wealth managers, retail investors and day traders. We’ve seen people taking their stimulus checks and turning them into Bitcoin.“

Similarly, the U.S. stock market experienced a remarkable increase in trading activity among retail traders on platforms such as Robinhood and Charles Schwab.

Since early 2020, the inflow of capital from institutional investors into Bitcoin increased rapidly, primarily through Grayscale’s Bitcoin Trust. Based on the increased appetite for BTC by institutions, Powell emphasized that investors are looking for a secure asset amidst the uncertainty of the global financial market.

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Paul Tudor Jones, the billionaire hedge fund manager and founder of Tudor Investment Corporation, said he invested in Bitcoin as a hedge against inflation. Since then, the perception of Bitcoin as a store of value and a potential long-term safe haven asset has improved. Powell added:

„Everyone is getting in (Bitcoin). I think we all know that a lot of people have a lot of free time at home these days, people are taking their stimulus checks and taking them to Bitcoin or the stock market, so there has been a massive new influx, I think people are very concerned about the traditional markets and what is happening with the U.S. dollar and what they are looking for is a safe haven asset.

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Can demand lead to higher prices?
Market trends in U.S. exchanges and investment firms generally indicate that investors are steadily accumulating Bitcoin, even more so after the block’s reward was halved on May 11.

A confluence of fundamental factors, such as Bitcoin’s tendency to see a prolonged post-halving rally and steady demand from institutions, and the growth of trading activity on the major Bitcoin exchanges, increases the likelihood that a multi-year upward trend will occur as seen in previous price cycles.