85% Of Bitcoin Buying Is Done By US Institutions• January 30, 2023 3:56 pm • Comments
As the recent recovery on the crypto markets is gaining a lot of attention, many speculators are interested in who is doing the actual buying.
It turns out that around 85% of the Bitcoin that is being bought is due to the actions of US insitutions which indicates the importance of institutional capital when it comes to market direction.
This also indicates that many see a long term future for digital assets which is a rather bullish sign for the rest of the retail investors thinking about diversifying into the new sector.
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With that being said, it is still unclear if the previous bear market has completely ended or if this is just a temporary retracement before the downtrend continues again.
For veteran investors that actually believe in the fundamental value of digital assets and their ability to disrupt existing financial systems, it would actually be a positive thing for the price of BTC to go down again as that would give more opportunities to accumulate more.
US institutions account for 85% of #Bitcoin buying in 'very positive sign'
Matrixport’s head of research and strategy suggests the industry will soon see layer 1 and other altcoins outperforming relative to Bitcoin. pic.twitter.com/D7OCi541t5
— Technical Crypto Analyst (@TechCryptoAnlst) January 27, 2023
The data was shared in a Jan. 27 report from Matrixport, which suggests that it can be distinguished whether a digital asset is more favorable by retail or institutional investors at any given time based on whether that asset is performing well in the United States or Asian trading hours.
The report stated that if an asset that trades 24 hours “performs well” during U.S. trading hours, it indicates that U.S. institutions are buying it, while an asset that sees growth during Asian trading hours indicates that Asian retail investors are buying it.
The report cited that Bitcoin is up 40% this year, with 35% of those returns occurring during U.S. trading hours, meaning there is an “85% contribution” associated with U.S.-based investors, indicating that U.S. institutions are buyers of Bitcoin right now.
There were also other insights from the revealed data which may be of interest for retail investors.
Essentially, institutions tend to buy big name digital assets like Bitcoin first before they allocate capital to other altcoins.
Of course, an upward trend in Bitcoin will tend to start an uptrend for all other crypto tokens as well as much of the crypto market is correlated to BTC’s price action.
As institutional adoption continues, the fundamentals for the blockchain technology also looks promising as fears of inflation continue to encourage capital to enter the crypto market instead of holding capital in fiat currencies.
As a result, BTC is already considered an alternative store of value for many and may become more popular if there happens to be a financial crisis in the future in any region of the world.
— TSM (@miedzybrodzki) January 27, 2023
The stability in the price of Bitcoin is best driven when small scaled HODLers sell off as compared to a huge selloff by institutional investors who typically have a larger unit under their custody.
Corporate investors are prone to sell off their assets as Tesla did to over 75% of its Bitcoin holdings when it looked like it will not meet its financial aspirations sometime in 2022.
Corporate buyers typically use Bitcoin as a safety net to cushion against the effect of the likely slump in the broader financial ecosystem.
This makes the continuous accumulation a risky trend for individual buyers who may not have a time-tested strategy to hedge their bets in order not to be caught up in the snare of erratic selling pressures from corporate investors.
#bitcoin has been pumping this month as US institutions are responsible for 85% of buying pressure from the beginning of the year.
— Filippo Antonini (@AntoniniFilippo) January 27, 2023
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