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This diagram from August 10, 2022 shows the virtual currency Bitcoin. REUTERS/Dado Ruvic/Illustration
Aug 30 (Reuters) – Who can save Bitcoin?
The world’s largest cryptocurrency seems unable to take a break, breaking above $25,000 for the first time since the crash in June before falling back toward $20,000.
The contraction at the end of August forced the market to face the Big Bitcoin question: Where will the real rally come from?
With institutional investors currently out of the midst of the macro turmoil, die-hard retail investors look the most likely to bail out.
The amount of liquidity bitcoin across the market, held by wallets that are rarely used or sold, has increased by 73,840 bitcoins over the past week, according to Chainalysis data. This equates to approximately $1.7 billion at recent prices.
Additionally, the amount of bitcoin held over a year has increased by an average of 54,300 over the past four weeks, the largest increase in nearly four months, Chainalysis said. Meanwhile, crypto exchanges saw his third straight month of net outflows as investors put their tokens in cold storage instead of selling them, according to Arcane Research.
It is clear that long-term holders at the retail level are also accumulating, with the number of wallets holding relatively small amounts of bitcoin actually increasing, said Jay Fraser, head of strategy at the BSTX stock exchange. Increased has.
“Don’t underestimate the impact of retail HODLers,” said Fraser, referring to a cohort whose name emerged years ago after traders misspelled “hold” on an online forum. Their lack of sales will help create more scarcity, which will eventually lead to another Bitcoin supply shock.
So what about the deep-pocketed institutional investors who jumped on the crypto bandwagon when prices soared?
According to some market participants, these large investors have been a major factor in cryptocurrency’s slump in recent months.
According to Coinshares data, about $9 million was taken out of digital asset investment products favored by traditional institutional investors in the week ending Aug. 19, when bitcoin fell again.
Late movers institutions nearing the highs or nearing the $30,000 to $50,000 level most often let the market down, said Ed Hindi, chief investment officer at Tyr Capital Partners. Stated.
Hindi pointed to sharp discounts between futures contract prices and bitcoin spot prices on the CME exchange as further evidence of institutional bearishness.
The discount rate for the most traded contract month hit an all-time low of 3.36% last week, according to analysts at Arcane Research.
But don’t rule out institutional investors – there’s plenty of evidence they haven’t given up on Bitcoin, which has fallen a whopping 70% since hitting an all-time high of $69,000 in November. , 2022.
Some market watchers have speculated that BlackRock, the world’s largest asset manager, has decided to launch a private bitcoin investment product for institutional investors as demand remains strong and could drag the cryptocurrency out of the doldrums. It is pointed out as a strong indication that there isread more
Andy Edstrom, managing director of Swan Advisor Services, said his firm has been trying to attract Bitcoin investment interest from financial advisors and their clients, even though some “good weather interest” has died down. He said he was still looking.
Some advisors are ready to buy dips and say, I have dry powder to invest in $20,000 Bitcoin, he added.
Reporting by Lisa Pauline Matakkal and Meda Singh of Bengaluru. Edited by Pravin Char
Our criteria: Thomson Reuters Trust Principles.
