Institutions Keep Buying Bitcoin’s Dip, Despite Near-term Volatility: Data

Data from on-chain data website Glassnode shows that the number of addresses with 1,000 or more Bitcoin (often referred to as “whales”) continued to rise this week, while Bitcoin prices fell to below $ 30,000 on Thursday . The number of such addresses decreased at the end of December and has increased again since the beginning of 2021.

According to data from South Korea-based blockchain analytics firm CryptoQuant, the number of total Bitcoin transactions on the network remains high. However, the ratio of bitcoin transfers involving all exchanges to all bitcoins transfers across the network has not increased, indicating that most transactions were made through over-the-counter (OTC) trades, an approach preferred by institutional investors.

“Only 7% of network transactions are used for deposits and withdrawals,” said Ki Young Jun, CEO of CryptoQuant. “93% of transactions on the Bitcoin network are used for unlisted transactions such as OTC transactions.”

This “buy-the-dip” behavior from institutions like MicroStrategy is nothing new. A fourth quarter market report by OKEx Insights, the research arm of the crypto derivatives exchange OKEx, shows that institutional investors didn’t have to wait with the high volatility of prices last year.

The percentage of on-chain transactions over 1,000 Bitcoin rose to over 45% in September and is relatively high from just over 5% at the end of June last year, according to the OKEx Insights report.

“Institutional investors really piled into the Bitcoin space after Paul Tudor Jones announced his entry, and they didn’t stop when 2020 ended,” the report said. “Furthermore, we can assume that the institutes were at the end of the spectrum, buying large amounts of BTC – as opposed to selling – as the price of the leading cryptocurrency rose parabolically in the fourth quarter of 2020.”

The recent price volatility is due to speculative traders and retail investors who have proven to be “weak”, according to Adam James, Senior Editor of OKEx Insights.

“There’s little reason to believe that institutional interest in bitcoin will suddenly fade in 2021,” said James, noting MicroStrategy’s new bitcoin purchase and BlackRock’s interest in bitcoin futures. “As institutional investors tend to have longer time frames when investing, the January drop in prices is unlikely to get them phased and may be happy to invest at lower prices.”

At the time of going to press, Bitcoin price was $ 33,308.06, according to CoinDesk BPI, up 4.56% over the past 24 hours.

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