Institutions are not interested in Bitcoin despite the sharp drop in prices
At the beginning of the year, the prevailing narrative in the crypto markets was that institutional investors would add large amounts of Bitcoin to their holdings. Well-known investors, from hedge funds to large Wall Street firms and blue-chip companies, are expected to jump in quickly.
Now that BTC price has almost halved from its approximate all-time high of $ 65,000 in April, things are a little different: while the situation now looks a bit like this, there has been a sell-off in the market, but the data shows that institutions are not interested in accumulating this bargain as they seem to be influenced by the same concerns that drove prices down.
According to blockchain analytics firm Coin Metrics, bitcoin addresses “whales” – those who own 1,000 BTC or more – have fallen from nearly 2,500 in February to around 2,150 in May. Since then, the ratio has gradually fallen around the low level.
Another blockchain analytics company, Glassnode, was incorporated into. mentioned report Monday that Bitcoin balances are stagnating on Coinbase offers a different take on a similar move.
Additionally, the number of Open Interest (OI) in Bitcoin futures has fallen 59% since last week from its April 13 high, a sign that institutional investors are cautious.
“The demand from companies still seems lackluster,” emphasized Glassnode.
Bitcoin balance on the Coinbase exchange | Source: Glassnode
The latest data could reflect why Bitcoin was stuck between $ 30,000 and $ 40,000 in June, after a price spike last year, in part due to expectations that a new wave of buyers will emerge.
The signs continue to suggest that the organization is preparing for the plunge. BlackRock, Goldman Sachs, Morgan Stanley, and JPMorgan are among the traditional financial institutions that have either set up Bitcoin funds and services or admitted to considering switching to cryptocurrencies in recent months. On Tuesday, financial services company TP ICAP announced that it was launching a cryptocurrency trading platform with financial heavyweights Fidelity Investments and Standard Chartered.
However, concerns about the potential environmental impact of Bitcoin, regulatory action against Bitcoin mining and trading in China, and, more recently, a sharp drop in the network’s hashrate appear to have worried investors.
Another concern is the possibility that the US Federal Reserve might tighten monetary policy to fight inflation. The prospect of a rapid surge in consumer prices after trillions of dollars of central bank incentives is the main source of demand for Bitcoin as King Coin, with its hard-coded spending limit, acts as a bulwark against the depreciation of the US dollar.
Industry executives say they see little evidence of investors dropping or liquidating en masse:
“Despite the signs of investor anxiety during the recent bear market, we are not seeing any major outflows from institutional users,” said Lennix Lai, chief financial officer at Exchange OKEx.
“We talk to institutional investors every day. They are still allocating record amounts of funds, “said Jeff Dorman, chief investment officer of crypto-investment firm Arca Funds.
“We join a large group of diverse institutional companies, hedge funds and asset managers. We are seeing increasing interest from traditional finance, “said Luuk Strijers, chief commercial officer of derivatives trading platform Deribit.
Organizations are slowing to follow MicroStrategy
At the beginning of the year, MicroStrategy was the first US company to invest in Bitcoin and CEO Michael Saylor has since been considered an influential figure in the Bitcoin community of a US company.
MicroStrategy’s investment sparked speculation that other large companies might follow suit. At that time, many guesses pointed to Twitter, Tesla, Apple, Warren Buffett’s Berkshire Hathaway and even the Wendys burger chain.
MicroStrategy continues to buy and raised approximately $ 500 million earlier this month to buy more BTC by selling corporate bonds. Meanwhile, John Todaro, vice president of crypto assets and blockchain research at Needham & Co., confirmed that a number of small businesses are still “aggressively” moving towards Bitcoin.
However, reality shows that very few additional buyers are large companies. Todaro says the adoption of Bitcoin by large companies is slowing.
According to Coindesk