Institutional demand for Bitcoin is dwindling as BTC battles under $ 31,000

Jul 20, 2021

The thorny path that Bitcoin (BTC) has traversed over the past two months continued on July 19, when a much anticipated downward move occurred in the early hours of Monday morning and the price of BTC plummeted to less than $ 31,000 let.

Data from Cointelegraph Markets Pro and TradingView show that a wave of sales at noon drove the BTC price up to $ 30,400 before bulls came to support and pushed the price back up to $ 30,850.

Institutional demand for Bitcoin is dwindling as BTC battles $ 13 under $ 31,000
BTC / USDT 4 hour chart. Source: TradingView

The entire market continues to face an uphill battle as miners’ brain drain following China’s crackdown on the mining industry resulted in the fourth consecutive negative correction in Bitcoin mining difficulty. The numbers have almost halved since mid-May.

The volume is nearly $ 31,700

Details on the current state of the Bitcoin network were provided in the latest report from Glassnode. This report forms the basis by looking at the UTXO actual price distribution, a metric that defines volume profiles in the chain across different price groups.

Institutional demand for Bitcoin is dwindling as BTC battles $ 15 under $ 31,000
Bitcoin UTXO price distribution made. Source: Glassnode

Recent data shows that 10.5% of BTC’s circulating supply traded between $ 31,000 and $ 34,300, the highest since the price of $ 11,000.

While this shows good volume at the current level, it is important to note that if the BTC price drops, the next major supports are at $ 26,500, $ 23,300, and $ 18,800.

Institutional cravings for BTC are disappearing

The market-wide decline in May caused a significant drop in interest from institutional investors currently in risk management mode as BTC price struggles to move higher.

Evidence of a decline in interest rates can be found in the market price of the GBTC, which continues to trade at a discount of -11.0% to -15.3%, or in the observation of the net capital flow in the Purpose ETF, which has slowed significantly. Data from Glassnode shows the ETF recorded a net outflow of -90.76 BTC, which is the largest outflow since mid-May.

Institutional demand for Bitcoin is dwindling as BTC battles $ 17 below $ 31,000
Purpose Bitcoin ETF flows. Source: Glass knot

Although institutional activity has been subdued, BTC deposits continued down the chain on exchanges at over 28,700 BTC, the largest inflow in over a month and a half, which happened on July 16.

Institutional demand for Bitcoin is dwindling as BTC battles $ 19 under $ 31,000
Cash flow to all Bitcoin exchanges. Source: CryptoQuant

Cash flows during consolidations and corrections are often viewed as a negative development as they can lead to increased sales and short-term price failures.

Glassnode also points to a net outflow of 1,780 BTC to over-the-counter (OTC) desks in the past two weeks as “against the structural trend in capital outflows since November 2020”.

Institutional demand for Bitcoin is dwindling as BTC battles under $ 31,000 21K
Total Bitcoin balance held by the OTC desk. Source: Glass knot

Glass knot says:

“It remains to be seen whether this net inflow is a short-term effect or an early sign of a reversal in the supply and demand balance.”

connected: Institutions cautious as crypto products have their lowest volume since October

Covid-19 worries will hurt the market

The crypto market isn’t the only one to be under downward pressure on July 19 as an increase in Covid-19 cases caused global financial markets to decline.

The S&P 500, DOW and NASDAQ indices all closed 1.59%, 2.09% and 1.06%, respectively.

Among the top 200 cryptocurrencies, the only two notable performances that day were a 24% gain for Bitcoin Standard Hashrate Token (BTCST) and a 17% gain for Dash (DASH).

Institutional demand for Bitcoin is dwindling as BTC battles $ 23 under $ 31,000
Daily market performance for cryptocurrencies. Source: Coin360

The total crypto market cap is $ 1.245 trillion and the dominance of bitcoin is 46.3%.

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