16 May 2022 09:10, UTC
Reading time: ~2 m
Asset movements in the crypto market may indicate that institutional investors are hoarding bitcoins again
Cryptocurrency assets have been cheapening en masse for the past two weeks, and eventually the market has fallen 25% since the beginning of the month, losing nearly $500 billion in capitalization. The fall culminated on Friday, May 13. As a result of the sale, the total value of all coins in circulation updated the annual minimum, falling below $1.3 trillion. But over the weekend, the market calmed down, and many crypto-assets even showed a small profit.
Sharp market crashes aren’t always a bad thing. They create favorable entry points for investors seeking long-term profits. According to CryptoQuant CEO Ki Yong-joo, this is exactly the situation right now.
The head of a blockchain analytics company said that “institutional investors are buying BTC right now through market makers.”
Institutionalists are hoarding bitcoins
Ki Yong-joo studied the cash flows on major crypto exchanges over the past week and concluded that big investors are moving into the hoarding stage.
Onchain analytics showed that market makers using the Gemini exchange sent a record amount of assets – about 84,000 BTC – to Binance from May 7 to 10.
Zhu added that the strongest selling pressure was seen on Coinbase, where the most BTC from Binance flocked. Spot BTC/USD trading volume at Coinbase reached a yearly high, while Coinbase Premium marked a three-year low of -3%.
Zhu concluded that market makers had already sent about $2.5 billion worth of bitcoins to exchanges last week, adding:
“I don’t think the sales are over, but institutionalists are probably ready to accumulate, as the bulk of the sales have gone through Coinbase.”
According to the latest earnings report, institutional investors are responsible for 3/4 of the trading activity on Coinbase.
The Luna Guard Foundation was one such big seller; it sent about 80,000 BTC to Gemini and Binance last week during the Terra crash.
Ki Yong Ju summarized that “institutions tried to buy BTC at the $30,000 level, but they had to set orders at $25,000 because of the unexpected sale of LFG.”
Markets take a breather.
According to CoinGecko, most crypto-assets entered the green zone over the past 24 hours, and total market capitalization rose 2.8% to $1.36 trillion. Nevertheless, pessimism still prevails in the market, and in the long term, the crypto market faces a downtrend.
The temporary respite in cryptocurrencies may be a sign of a minor period of accumulation, but judging from previous cycles, bear markets usually drag on for a year or two.
Total market capitalization is currently 56% below the historical high of $3 trillion set in November 2021, so neither a final market capitulation nor a prolonged period of consolidation can still be discounted.
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