Bitcoin: institutional investors took advantage of the fall to buy
Blockchain data shows large investors remain confident in Bitcoin’s long-term outlook and continue to accumulate coins in the event of a dip, ignoring concerns about the negative environmental impacts of cryptocurrency mining, notes Omkar Godbole on Coindesk.
Over-the-counter (OTC) and off-market wallets posted an outflow of 10,292 BTC on Wednesday, as bitcoin rose from $ 43,000 to nearly $ 30,000.
According to data tracked by Glassnode, this was the largest one-day OTC outflow in 3.5 months.
The number rose further to 11,056 BTC on Thursday, reaching the highest level since December 31 and bringing the six-day count to nearly 35,000 BTC.
Institutional investors often make investments through OTC portfolios to avoid influencing asset prices. Therefore, these outflows are taken into account to represent institutional purchases.
The number of daily transfers from OTC counters (outgoing transactions) hit a record 245 on Thursday, a 10-fold increase in six
âOnce again, institutional demand is strong,â said Jan Happel and Jann Allemann, founders of Glassnode, in a tweet, highlighting the increase in outbound OTC transactions. âWhatever bitcoin dips we see this summer are not going to last long. It might just as well hold up. “
This has been the logic of institutional investors this year, to buy when there is a dip. For example, the seven-day moving average of daily OTC table departures increased when the cryptocurrency suffered price reversals during the second half of February and after Coinbase debuts on the Nasdaq.
The average doubled to over 5,000 BTC when it dropped from $ 58,000 to $ 30,000 on May 12.
It is also a sign that institutional investors are not concerned about companies distancing from BTC due to environmental concerns.
You will all know, from Elon Musk’s statements this week, that they will not receive BTC to buy Tesla cars after announcing their acceptance last February, weakening hopes of wider adoption by companies. .
Institutional investors remain optimistic, analysts are not.
âWe believe most of the leverage is out of the system right now and bitcoin should start forming a base here,â said Pankaj Balani, CEO of Delta Exchange.
“However, the sharp drop (40% between Sunday and Wednesday) has eroded confidence, and it will take some time for Bitcoin to regain bullish momentum.”
The exchanges liquidated nearly $ 10 billion worth of derivative positions on Wednesday, leaving the market in a much healthier state than a week ago.
Balani expects an increase to $ 45,000 or even $ 50,000 as the monthly options expiration next Friday approaches, but sees a deeper decline if the $ 36,000 support breaks.
âA conclusive break below that would indicate this correction is more important than a near-term bull market pullback and all bets are off,â Balani said.
However, regulation remains a critical risk in the short and long term. âRegulatory headwinds and global macroeconomic risk could weigh a little more in the second and third quarters,â said Joel Kruger, currency strategist at LMAX Digital. âAt the same time, I think if we see further declines below $ 30,000, they will be short lived.â
Learn how to invest in bitcoin and other crypto assets with the Investment Strategies course.