Editor's Note: This article comes fromChain reference (ID: lianneican), Author: Internal Reference Jun, reprinted by Odaily with authorization.
Editor's Note: This article comes from
Chain reference (ID: lianneican)
Chain reference (ID: lianneican)
Recently, the price of bitcoin hit a two-year high of $16,000 (more than 100,000 yuan). Especially as the results of the U.S. general election were basically settled, Bitcoin once fell by more than 7% on the 8th. The current BTC price is fluctuating around $15,300.
Who exactly helped this Bitcoin rally? Is it a retail retail investor? Or high net worth individuals, or institutional investors? There are different opinions.
However, everything from institutional HODLing, record high-quality fundamentals, low retail interest, high time frame breakouts, and technical indicators point to no reason for BTC to fall. On the contrary, in the past six months, after the test of many negative events, the price of BTC can quickly adjust back to the upward track after a sudden drop.
In Nei Shenjun's view, it seems that a bigger bull market may be brewing.
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Technical indicators show that it is not overheating
As previously reported by Cointelegraph, the monthly chart shows that Bitcoin is well above key moving averages. Technically, this means momentum is unaffected, but a healthy pullback could be beneficial.
At the same time, according to the Mayer Multiple, Bitcoin’s historical price cycle shows that the current BTC rally is not overheated.
Mayer Multiple analyzes the price of Bitcoin based on its 200-day moving average to assess its long-term price trend. If the multiple is above 2.4, it would suggest that the rally may be overheating. Taking BTC as an example when it hit $20,000 in 2017, the multiple rose to around 3.8.
Currently, as of November 2, the Mayer multiple is hovering around 1.27. This shows that while BTC has risen from $3,600 to $13,350 since March, the rally has not overheated.
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High net worth investors are stepping in
This round of surge shows that a considerable number of high-net-worth individuals are involved, which we can confirm by using on-chain data. There are two metrics to measure here: the average transfer volume of Bitcoin and the rate of new investor additions.
Bitcoin’s average transfer volume is exactly what it says it is, the average value of on-chain transfers.
Lately, this has been proliferating, pointing to more and more participants, and since it's not just the total value transferred on-chain, this metric can give you an idea of the type of investors, namely high net worth individuals.
The graph shows that activity among these users has increased rapidly during the recent market surge.
The attached chart highlights new investors entering the market, adding this information to the above shows that these investors are brand new, implying new money entering the market.
Both indicators suggest that the recent rally was no accident, as it was backed by volume and backed by real on-chain data.
When whales buy bitcoin, they mostly facilitate the transaction through the over-the-counter (OTC) market. Over time, the spot market and the derivatives market lagged behind the OTC market as whales led the rally.
The trend of giant whales rushing away retail investors is optimistic, because it shows that Bitcoin is still in the embryonic stage of a bull market. A lot of money from new retail and mainstream investors has yet to enter the cryptocurrency market.
Another indicator from Glassnode depicts a similar trend. The number of Bitcoin addresses holding more than 100 BTC reached 16,271, a seven-month high.
Whales have been buying Bitcoin over the past few months, which is bullish in itself. If the number of addresses containing large amounts of bitcoin increases, analysts see an overall surge in new whale accounts. The behavior of more high-net-worth individuals hoarding Bitcoin is consistent with the recent frenzy of institutions around BTC.
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Institutions’ “coin hoarding” campaign
According to HODL tide, which evaluates the trend of long-term Bitcoin holders, more and more investors choose to hold BTC for a long time.
HODL activity has increased since the BTC price briefly fell below $3,600 in March. Since then, investors have been steadily accumulating BTC. The combination of growing BTC holdings with strong fundamentals, a favorable high-time frame technical structure, and positive technical indicators strengthens overall market sentiment and could ultimately lead to a larger rally in Bitcoin.
Grayscale Bitcoin Trust has outperformed gold exchange-traded funds (ETFs), a trend likely driven by institutional investors such as family offices, according to a JPMorgan analyst note obtained by CoinDesk.
Analysts said that the excellent performance of the Grayscale Bitcoin Trust shows that it is not only millennials who are driving demand for Bitcoin, but also institutional investors such as family offices and asset managers. Grayscale is part of CoinDesk's parent company Digital Currency Group.
The facts also confirm this statement. Just last week, Grayscale saw a record inflow of $215 million (15,907 BTC), surpassing all previous investments in the trust. As of this writing, the company currently holds $6.7 billion in Bitcoin (481,711 BTC).
The trust, established in September 2013, has seen explosive growth this year, growing its assets under management, or AUM, from $1.9 billion to $4.7 billion as of September this year. Since Grayscale released its Q3 report, its Bitcoin Trust’s AUM has grown by another $2 billion.
Over the past three quarters, Grayscale has put nearly 70% of its total weekly inflows into its bitcoin trust. Bitcoin Trust weekly inflows grew from a 12-month average of $39.5 million to over $55 million in Q3, with 84% of that attributable to institutional investors.
Last week, Grayscale released its second Bitcoin investor research report, which found that the number of U.S. investors interested in investing in BTC has grown from 36% in 2019 to 55% in 2020.
Grayscale holds far more Bitcoin than other listed companies (although the fund is not directly comparable to companies holding BTC as a reserve asset). As of October 13, the remaining 12 companies held a total of about 150,000 BTCs, among which WeStrategy (38,250 BTCs), Mike Novogratz’s Galaxy Digital (16,551 BTCs) and Jack Dorsey’s Square (4,709 BTCs) held The amount is eye-catching.
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Is the BTC bull market just getting started?
As it stands, chart patterns are showing signs of similar market action ahead of Bitcoin’s all-time high in 2017 ahead of the 2017 bull run. At the time, the price of bitcoin was around $7,000, and it soared to $16,000 in just three weeks. If the coin follows the same trend, there is a good chance we could see new all-time highs in a short period of time.
Bitcoin analyst Yassine Elmandjra pointed out that the price of Bitcoin is 40% of its all-time high in May 2019. Now, the cryptocurrency is at 80% of its all-time high, the closest it's ever been to a full recovery.
