Institutional investors have seemingly bought the dip after the price of bitcoin corrected from an all-time high above $58,000 to about $45,000, with $650 million leaving cryptocurrency exchange Coinbase potentially signaling a large buy.
The CEO of crypto data firm Ki Young Ju pointed to a massive 13,000 BTC movement out of the San Francisco-based cryptocurrency trading platform and pointed out the funds “went to multiple Coinbase custody wallets.” Per his words, this is the “strongest bullish signal” he has ever seen.
Coinbase’s custody wallets, as CoinDesk reports, are linked with its over-the-counter trading desk. Institutions usually transact over-the-counter to avoid influencing spot markets with large orders, and outflows from Coinbase going to cold wallets for custody are interpreted as institutional activity.
As CryptoGlobe reported, large outflows from Coinbase were spotted as the price of bitcoin broke through the $30,000 mark earlier this year, and market watchers have noticed that when BTC goes up, a premium develops on Coinbase over the massive buying pressure coming in from institutions.
Bitcoin is trading at $50,800 at press time after moving up 2% in the last 24-hour period, according to CryptoCompare. Bitcoin’s price is recovering from a slump that saw the cryptocurrency lose about 20% of its value earlier this month, only to start recovering shortly after. Companies like MicroStrategy used the opportunity to add more BTC to their treasuries.
The price of BTC is recovering even after Federal Reserve chairman Jerome Powell assured markets monetary stimulus will continue.
His words failed to influence an ongoing rally in U.S. bond yields that has been putting pressure on tech stocks and the market itself. Popular analyst Alex Kruger noted that interest rates going up could have a negative effect on assets that benefitted from them dropping, including gold and bitcoin.
The analyst and economist pointed out that with bitcoin “there’s a chance it does its own thing as institutional penetration remains very low,” and as such inflows may continue. Risk assets and gold, on the other hand, may be in for “a very rough ride down.”
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