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The price of the bitcoin hit a new record this week. For the first time, the leading cryptocurrency has surpassed US$ 40,000. According to CNN, it had accumulated a 700% appreciation since March 12, 2020, when it started a rally in its price.

At the end of 2020, the bitcoin first broke the market cap record, surpassing, for the first time, US$ 330 billion in market capitalization. In December, it was the time to break the all-time price high after three years, as it was traded at more than US$ 20,500.

The US$ 30,000 mark was left behind on January 2. At the peak of day 7, the price of bitcoin reached US$ 40,402.46, the website reports. On the day this report was written, the leading cryptocurrency was worth US$ 41,467.23, accumulating a surge of more than 40% in seven days.

The new bitcoin price record reminds dot-com bubble, but there are differences

Michaël van de Poppe, an analyst at Cointelegraph Markets, believes the movement is only beginning. “The markets are doing very well, and the high cycle is starting right now. That means the market is likely to continue trend upwards next year”, the analyst said, according to Cointelegraph.

For Sui Chung, CEO of CF Benchmarks, this shows that “we are seeing the maturing of an entirely new asset class”.

But the path is not strewn with roses. While Quantum Economics’ Mati Greenspan believes bitcoin could reach US$ 100,000 , there are cautious ones. David Lifchitz, CIO of asset manager ExoAlpha, believes that the intense surge is reminiscent of the dot-com bubble.

However, there are differences in the Bitcoin shoot scenario in 2017, when the currency lost more than half its value in a month. Talking to Infomoney, Safiri Felix, director of Transfero, highlighted the change in the profile of investors. If before there were many individuals discovering crypto, now the institutional players are on the scene.

“The buyer flow is much higher because the big Wall Street banks and brokers are acquiring Bitcoin”, Felix says.


The amount of bitcoin available may explain new surge

A Glassnode report analyzed the stock of bitcoin available on the market. The text reminds us that the amount of currency over time was pre-programmed. Thus, 88.5% of the total has already been mined, so about 18.6 million bitcoins were circulating when the assessment was done.

However, not all of this supply is available for purchase and sale. In fact, according to the document, only 22% of this total are free to trade. The other 78% are “non-liquid”. And “more than 1 million BTC became illegal throughout 2020”, Glassnode says.

 Additionally, according to the analysis, there has been an upward trend in bitcoin’s “non-liquidity” last year. “This indicates that an impressive amount of non-liquidity drives the current bull market”. 

One of the factors that increase bitcoin’s lack of liquidity is the purchase of large amounts of cryptocurrency by institutional investors, as JPMorgan bank has warned. As they seek long-term investments, they end up locking the values for longer, reducing liquidity.