On Tuesday, March 26th, in support of continued growth, we highlighted the actions of whales and sharks who have returned to accumulating coins. Today, let’s consider several more arguments suggesting the establishment of a new price record.
Crypto Funds
Last week, spot ETFs showed a net outflow of $888 million. This was due to increased withdrawals from the Grayscale fund because of high management fees and a decrease in inflows to other funds.
However, on Tuesday, interest in Bitcoin from ETF buyers returned with renewed vigor, totaling $418 million. This is significantly above the average of $225 million. Most analysts believe that this trend will strengthen over time, as institutional players have yet to engage in trading with these new instruments, and the main flow of funds comes from retail investors.
Low Activity in the Spot Market
The major battles between bulls and bears are taking place in the derivatives market, which accounts for 70% of the total trading volume. The market depth (the volume of placed orders on both sides of the price) for Bitcoin has finally approached pre-crisis levels.
However, those who directly own Bitcoin and are willing to part with coins at current prices remain few. This is vividly demonstrated by the volume of transfers within the network. If in the previous bull cycle it exceeded $1 million on average per week, now it does not even reach $200,000.
Lack of Reaction to Negatives
The institutionalization of Bitcoin has proven to be a vaccination against problems for individual market participants. The arrest of Binance top managers in Nigeria and yesterday’s indictment by the US Department of Justice of the cryptocurrency exchange and leaders of KuCoin (with an annual turnover exceeding $1 trillion) on criminal charges did not affect the price.
Now Bitcoin in the world’s largest economy is an investment asset and commodity, access to which investors can obtain through licensed exchange products. Thanks to this, the connection with cryptocurrency exchanges has become more indirect.
Long-term Factors
At its latest meeting, the Federal Reserve confirmed its intention to lower the rate by 0.75% in three steps this year, with the first adjustment possibly taking place as early as June. This will lead to a reduction in demand for government bonds and increase interest in risky assets such as Bitcoin.
In mid-March, JPMorgan reported that adjusted for volatility, Bitcoin already outperforms gold in investors’ portfolios by 3.7 times. This is clearly demonstrated by the superiority of the two Bitcoin ETFs over the gold (and any other) fund in terms of investment volume in the first 50 days of trading since launch.
Disclaimer
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