During 2020, Grayscale Investments’ BTC holdings saw a massive rise, topping at just over 650,000 bitcoin in February (figure 2).ĭue to the popularity of the GBTC shares for entities that may not have been willing to self-custody large amounts of bitcoin themselves, the price of GBTC shares traded at a massive premium over the spot bitcoin price. Grayscale Investments, which is a fund where mostly institutional investors (81–84%) can buy shares that Grayscale would back with bitcoin (GBTC) and promise to never sell, with exception of their annually deducted fee. However, in February, one of the largest drivers of the price run-up into new highs also stopped doing so.

During that time, there was still large institutional FOMO going on, likely triggered by the combination of MicroStrategy and NYDIG’s institutional onboarding event that was rumored to be very successful, as well as Tesla buying $1.5 billion worth of bitcoin in early February and accepting it for car sales. Most notably, sell pressure of long-term holders and miners started to drop off.

In January 2021, the bitcoin price reached its first local top of its bull cycle, during which several on-chain trends changed. Bitoin’s full 2021 price history (on Kraken) is displayed in figure 1. It closed the year at a price of $46,150, which is a $18,804 (68.8%) increase since the start of the year. Hopes were very high, which was largely driven by the institutional fear of missing out (FOMO) that Michael Saylor and MicroStrategy triggered, in combination with PlanB’s Stock-to-Flow (S2F) and S2F Cross Asset (S2FX) models that predicted a price of around $100,000 and $288,000, respectively.īitcoin never saw those prices in 2021 but did set a new all-time high at $68,991 (on Kraken) in November. The bitcoin price opened the year at $27,346 (on Kraken) and actually never looked back. This eighth edition provides a year in review for 2021 and then assesses what current trends look like going into 2022. Cycling On-Chain is a monthly column that uses on-chain and price-related data to better understand recent bitcoin market movements.

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