Institutional investors have been scooping up ‘massive amounts’ of digital assets at depressed prices.
It’s been a rollercoaster ride for BTC, with April’s shock reversal leaving traders little time to pick up BTC at low prices. But it turns out that large investors – institutions, big money, smart money, call it what you want – has been accumulating crypto on a grand scale. As one analyst puts it:
According to a recent report for diar – a data analysis company which provides expert insights into the global digital currency industry, Bitcoin supply holdings have shifted ever since reaching the recent bottom. The most significant pattern that has emerged is that of Institutional investors scooping up massive amounts of digital assets at these discounted prices.
The transparent nature of the blockchain means it’s possible to track where bitcoins are moving, and the size of the wallets holding them. The report includes four charts that show the recent dynamics.
Firstly, the largest accounts – exchanges’ cold storage – have shed over 600,000 BTC since the December bottom. While small ‘Retail’ accounts of up to 100 BTC have collected some of these, the largest gainers have been the ‘Firms’ with between 1,000 and 10,000 BTC. They have added more than 450,000 BTC to their books overall.
Secondly, Firm-size addresses began piling in money at the end of last year, which showed up in the growth of larger addresses a few months back.
Thirdly, since the start of the bear market in January 2018, there has been a 26% increase in addresses with 1-10k BTC. Big money accumulates when the price falls, and sells when it rises – exactly the opposite of what retail traders tend to do.
Lastly, while Retail holders have held steady at around 38% of total BTC, exchange holdings have dropped from 20% to 16%, and Firms have picked up all of this 4%.
There are a couple of take-home messages from this.
- The rally has not been driven by Retail demand. Retail investors haven’t got back in yet – they probably won’t until at least $10k.
- Exchanges are distributing coins. What happens when their supply starts to dry up but Retail demand is increasing?
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