Bitcoin reaches new records due to the presence of this catalyst
Bitcoin rose to an all-time high on Wednesday, amid signs of rising long-term demand for popular cryptocurrencies as institutional interest in growth continues as the currency targets another record milestone.
Bitcoin rose 4.1% to $ 56,534, just below the record $ 58,335 on February 21.
Metrics on the closely watched chain that provide clues about support levels and user activity on the Bitcoin network or blockchain continue to indicate a healthy level of demand.
The increased outflows from bitcoin exchanges - a bullish indicator on the chain - indicate an increase in the number of traders moving their coins from exchanges to be stored in private wallets for an extended period. Outflows continued to increase near levels last seen since Bitcoin hit its previous peak above $ 58,000.
Currencies began flowing from exchanges to private wallets at a faster rate after Bitcoin reached around $ 45,200 following the recent sell-off, according to data from CryptoQuant.
Primary demand for bitcoin was supported by increased interest from institutional demand, with Goldman Sachs (NYSE: GS) joining counterparts such as JPMorgan (NYSE: JPM) to explore how to meet growing customer interest in bitcoin.
John Waldron, Goldman Sachs Chairman and Chief Operating Officer, said on Wednesday, according to Reuters:
"We are organized about what we do. We continue to evaluate ... and participate in it." The demand from customers is also increasing. "
But institutional demand has also extended to Bitcoin mining, which has helped the wider cryptocurrency ecosystem mature and reduce volatility, according to Canaan, a general provider of bitcoin mining hardware.
Nanjing Zhang, CEO and founder of Canaan, said in an email earlier this week:
"The renewed interest by institutional investors in bitcoin was not only evident in their purchase of the underlying asset but also in their focus on Bitcoin mining."
Zhang added:
"The impact from increased institutional participation has been a positive effect on broad-based cryptocurrencies - evidenced by increased industry maturity, steady increase in prices, and reduced market volatility."