Reversal ahead? Institutions are buying Bitcoin in droves

Bitcoin’s correction this month may be short-lived as institutions appear to have taken the pullback as a juicy buying opportunity, according to chain data.

The findings come alongside other blockchain-based signals that suggest Bitcoin’s price is at an appetizing entry point.

Institutions that just bought The Dip

As market intelligence platform CryptoQuant shared on Thursday, “institutions” — loosely defined as Bitcoin wallets holding between 1,000 BTC and 10,000 BTC — have been hoarding coins at their second fasting pace this year. year since the beginning of July.

Last week alone, these entities gathered 101,600 BTC into their blockchain addresses. Notably, this occurred during a period of low volume and inflows into US Bitcoin ETF products, meaning that this “institutional” build-up is not coming from these funds.

“This means that, unlike what was seen in March, which was more fundraising-related demand, the current institutional build-up may indicate a genuine process of ‘buying the dip’ from the big players,” he said. write chain analyst Cauê Oliveira on the matter.

March was the only month in which institutions experienced slightly larger inflows into their portfolios. Bitcoin hit an all-time high of $73,700 at the time, and Bitcoin ETFs were experiencing inflows on the order of $500 million per day. Based on publicly reported data, roughly 80% of inflows into Bitcoin ETFs from January to March appeared to come from retail investors.

Bitcoin’s price has cooled and consolidated since then, with the balances of the major holders increasing at a much slower rate in April and May, before rising in June and July.

Capitulation of the short-term holder

In particular, short-term Bitcoin holders who have held their coins for between 1 and 3 months have capitulated over the past month, especially last week when BTC fell below $54,000.

“Approximately $2.4 billion worth of Bitcoin between 3 and 6 months moved into the network during the crash,” Oliveira noted at the time. Analysts consider Bitcoin under six months a “short-term headline offering” that will likely change hands as novice traders experience Bitcoin’s volatility for the first time.

According to another blockchain analyst, El Crypto Tavo, capitulation of the short-term holder is generally a good sign that investors should buy.

“One of the best metrics for identifying optimal entry points in a bull market is when short-term Bitcoin holders are selling at a loss and the fear index is ridiculously high (which has been happening for the past few weeks) ” he wrote on Thursday.

“In contrast, previous market peaks have been signaled by long-term holders making significant profits over many months, which has not yet happened,” he added.

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