Bitcoin holds $28,000 in spot buys, but institutional investors are still selling
BTC’s price continues to show bullish momentum, but a lack of walkbuyers and institutional selloffs threaten to dampen the current rally.
Bitcoin
$28,216
Prices climbed above the February 2023 high of $25,200 after U.S. inflation data matched market expectations. Potential impacts from the global banking system continued to spur investment in Bitcoin as an uncorrelated global hedging tool, similar to gold in March. The correlation between gold and BTC has increased since the beginning of the month.
However, institutional investors are net sellers of bitcoin in 2023, setting a red flag. Bitcoin whales holding between 10 and 10,000 BTC are not participating in the current rally. Individual investors in particular appear to be driving the uptrend. A divergence between whales and retail investments could lead to a short-term drop in Bitcoin prices.
Institutions Are Forced BTC Sellers, Analysts Say
CoinShares institutional crypto flow data reported his two-week drop in the largest mutual fund since March 6. Outflows have offset positive inflows this year, bringing year-to-date net outflows to -$177 million.
CoinShares data tracks global institutional portfolios exposed in digital assets including Grayscale, Coinshares XBT, 21Shares, Purpose and 3iQ.
James Butterfill, CoinShares’ head of research, said in the report that flows “could be partially driven by liquidity needs during this banking crisis, with the COVID panic first occurring in March 2020. A similar situation was seen when the market hit the
Santiment, an on-chain analytics firm, told Cointelegraph, “We are not seeing any significant selloffs from whales at this time.” Bitcoin addresses of 10-10,000 BTC are basically unchanged. ”
It is encouraging that whales are not trying to sell the current rally. But as prices continue to rise, whale buyers will need to join the bandwagon. Otherwise the rally could quickly fade.
Additionally, the recent USDC de-pegging incident and regulatory crackdown on the BUSD stablecoin may have caused a small outflow of the stablecoin. Santiment reports that “from $100,000 to he $10 million stablecoin addresses have decreased slightly, but not by much.” The flow from stablecoins to Bitcoin and other cryptocurrencies is positive for prices. However, the massive conversion of stablecoins to the US dollar has weakened the purchasing power of the market. His lack of additional Wal-BTC holdings suggests that the flow is more representative of the latter situation.
Another major player in the Bitcoin economy are BTC miners. His BTC holdings at one-hop miner addresses representing BTC accounts that receive coins from mining pools have been steadily increasing since early 2023.
Some miners believe that when the price of Bitcoin crossed $25,000 for the first time, he posted some gains on March 14, and a week later he reached $28,000 again. However, since the beginning of 2023, total inventories have continued their upward trend.
Small investors on spot exchanges drive prices
So far, spot buying by retail investors is likely to support the rally. Will-Clemente, an independent on-chain analyst and co-founder of Reflexivity Research, said the uptrend was “due to subdued BTC futures contract open interest and perpetual contract funding rates.” Looks almost spot driven,” he tweeted.
His BTC address holdings of less than 10 BTC continue to hit all-time highs. The distribution among a small number of large holders lends credence to the “anti-bitcoin argument for concentration of supply” in a small number of large holders.
However, retail investors have a poor track record of timing their entry and exit into the market. Investor participation in whales is therefore critical to confidence in the current rally.
Technically, the BTC/USD pair looks to be getting stronger by the day, outperforming its widening wedge pattern, with positive breakouts and consolidations. Currently, buyers face resistance from his June 2022 drop levels between his $28,000 and his $30,000.
On the downside, the CME futures data show two unfilled gaps towards $26,500 and $19,500, increasing the likelihood of a pullback. Price gaps on the CME futures chart occur during US holidays and weekends when physical trading of Bitcoin on exchanges creates a gap between the closing and opening prices of the CME.
CME gaps are usually filled by price action towards the CME close, replicating the pump in the futures market. Veteran trader Peter Brandt recommended opening a short BTC position based on the gap.
A more seasoned investor may wait until the Federal Reserve interest rate meeting on March 22 before swinging open his position. The Federal Reserve interest rate announcement can act as a powerful market mover and lead to significant market volatility.
