Bitcoin (BTC) price continues to show bullish momentum, but the absence of selling institutional investors and whale buyers threatens to weaken the current rally. Crypto expert Nivesh Rustgi delves into this situation and explains its impact on price.
As the price rises, institutional investors are selling Bitcoin!
cryptocoin.comAs you follow, the price of Bitcoin rose above $ 28 thousand in the middle of the banking crisis. The potential fallout from the global banking system further bolstered Bitcoin investment in March as an unrelated global hedging instrument similar to gold. The correlation between gold and Bitcoin BTC has been increasing since the beginning of the month.
However, institutions have become net sellers of Bitcoin in 2023, which raises some red flags. Bitcoin whales (wallets holding between 10 BTC and 10,000 BTC) did not participate in the current rally. It seems that individual investors are mainly driving the uptrend. The difference between whale and individual investing could cause a short-term pullback in Bitcoin prices.
Analyst says institutions are forcibly selling BTC
Institutional crypto asset flow data from CoinShares reveals the largest biweekly sale from mutual funds since March 6. Outflows wiped out positive inflows for this year, with year-to-date net flow equaling negative $177 million. CoinShares’ data tracks the portfolio of global institutional funds with digital asset exposure, including Grayscale, CoinShares XBT, 21Shares, Purpose, and 3iQ.
James Butterfill, head of research at CoinShares, states in the report that the flows “may be partly due to the need for liquidity during this banking crisis, a similar situation seen in March 2020 when the Covid panic first hit the market.”
However, on-chain analytics firm Santiment reported that it “is not currently seeing large whale sales.” Therefore, Butterfill’s theory of forced sales by corporations may have some credibility. Bitcoin addresses holding 10-10,000 BTC have basically remained stable.
It’s encouraging that the whales don’t want to sell the current rally. However, as prices continue to rise, the asset will require whale buyers to join the majority. Otherwise, the rally may soon disappear. Additionally, the recent de-peg of USD Coin (USDC) and regulatory restrictions on Binance USD (BUSD) likely caused a small whale exit from stablecoins. Santiment reported that “addresses holding between $100,000 and $10 million in stablecoins dropped slightly, but not significantly.”
The flow of stablecoins to Bitcoin and other cryptocurrencies is positive for prices. However, large-scale conversions from stablecoins to dollars can weaken the purchasing power of the market. The lack of growth in whale BTC holdings suggests that flows represent more of the latter case.
Bitcoin miners’ assets are growing
Another important stakeholder in the Bitcoin economy is BTC miners. BTC availability in single-tab miner addresses with BTC accounts receiving funds from mining pools has increased steadily since the beginning of 2023. Some miners set aside some profits on March 14 when the price of Bitcoin first rose above $25,000 and touched $28,000 a week later. However, total assets are still in an uptrend since the beginning of 2023.
Individual investors in spot exchanges drive prices
So far, spot purchases by individual investors are driving the rally. Will Clemente, an independent on-chain analyst and co-founder of Reflexivity Research, says the uptrend ‘seems mostly spot-focused’, with open interest volumes for BTC futures contracts and funding rates on perpetual contracts.
Meanwhile, the presence of Bitcoin addresses of less than 10 BTC continues to rise to all-time highs. The distribution among small hands adds credibility to the ‘arguments against Bitcoin regarding concentration of supply’ among several large owners. However, individual investors have a poor track record in the timing of market entry and exit. Therefore, whale investors’ participation is crucial to confidence in the current rally.
Bitcoin position advice from senior trader Peter Brandt
Technically, BTC looks strong on a daily timeframe with a positive break and consolidation above the expanding wedge pattern. Currently, buyers are facing resistance from breakout levels between $28,000 and $30,000 in June 2022.
On the other hand, CME futures data raises the chances of a pullback with two unfilled gaps towards $26,500 and $19,500. A price differential on CME futures charts occurs during US holidays and weekends when spot trading of Bitcoin on exchanges creates a difference between the closing and opening price on the CME. Usually, CME gaps are filled with a price action to the closing price on the CME to track the pump in the futures market. Senior trader Peter Brandt recommends opening a short BTC position based on the gap.
More savvy investors are likely to wait for the US Federal Reserve’s policy rate meeting on March 22 before opening their floating positions. The Fed’s policy rate announcement will likely act as a strong market mover and cause significant market volatility.
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