After a couple of days at consolidation around $29,000, Bitcoin passed $30,000 on January 2nd and climbed as far as $33,300, before retracing to the $31,000 range. This latest milestone puts the cryptocurrency 50% above its previous all-time high of $20,000. It also marks a strong start to 2021 after an at-times tumultuous 2020 for Bitcoin.

Where previous bull runs were predicated on futures buying, which is inherently unsustainable due to leverage, this rally is a byproduct of strong buying pressure from the spot market. Mohit Sorout, founding partner of Bitazu Capital, wrote on the evening of January 1st: 

"$BTC is near $30k with spot leading the price. Absolutely incredible." 

This rally has faced little selling pressure as Bitcoin enters a phase of price discovery. In late December, analyst Cole Garner observed that there has been low selling pressure ever since $20,000 broke.

Bitcoin's rally is seemingly a consequence of institutional capital entering the space.

Technology analyst Kevin Rooke found that on December 22nd, Grayscale's Bitcoin Trust (GBTC) added 12,319 bitcoin to its holdings in a single day. 

This is "more than the 11,512 BTC they added during all of last week, when Bitcoin broke its ATH." 12,319 bitcoin has a current market value of $370 million. 

SkyBridge Capital, an alternative assets fund with over $7 billion under management, was also recently reported to have invested $182 million into Bitcoin. SkyBridge Capital has begun the operation of a Bitcoin-focused fund to allow investors like registered investment advisors to buy the cryptocurrency. 

SkyBridge Capital is one of many Wall Street investment funds that have allocated capital to Bitcoin in recent months.

Retail investors are also starting to have a strong impact on Bitcoin's market dynamics. 

Cryptocurrency investment firm Pantera Capital found in December that PayPal users alone buy more bitcoin than there are mined each day:

"When PayPal went live, volume started exploding. The increase in itBit volume implies that within two months of going live, PayPal is already buying more than 100% of the new supply of bitcoins." 

Investors expect Bitcoin's price action to be skewed bullish as long as this demand continues to outweigh the supply of bitcoin that is being sold. 

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