Massive cash for Bitcoin price uptrends comes from US institutions – Is it a bull trap or sustainable

  • Bitcoin (BTC) has continued to gain traction among institutional investors in the United States.
  • This embrace may not necessarily fuel the growth of digital assets across the board.

Bitcoin’s (BTC) price is constantly in the crosshairs of almost every trader in the digital currency ecosystem. The largest market capitalization digital asset is also being given the biggest attention in the market by the big money buyers or institutional investors.

According to a report from CoinTelegraph, Matrixport’s head of research and strategy, Markus Thielen confirmed that the bulk of the buying momentum that is pushing the price of Bitcoin upward is being fueled by the hoard of institutional investors pumping cash into the industry.

The claims are not unfounded as firms like MicroStrategy Incorporated, Block Inc, and Paypal Holdings Inc are notably heavily invested in cryptocurrency. While the institutional investors betting on Bitcoin are not confined to those that are publicly listed, many of those investing in the nascent asset class are almost unknown as a result of the fact that they do not make their filings public.

Per the CoinTelegraph report, data insights from Matrixport show that if an asset that trades 24 hours performs well during US trading hours, then it is the institutional investors that are fueling such growth. On the other hand, if an asset that trades round the clock outperforms during Asian trading hours, then it is being fueled by buying activities from Asian retail investors.

While the United States institutions have the money to move the market, Asian retail investors have the number to cause a change but there is a bigger tilt in the performance of Bitcoin that showed it is being driven by US corporate buyers.

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While the Matrixport research lent a good insight, that existing holders of Bitcoin like Tesla chose not to sell its remaining BTC has also injected some price stability into the market as a whole.

Bitcoin price and institutional investor buying, a good or bad trend?

While everyone that invests in Bitcoin or any risk asset is out to make a profit from their holdings through price growth, institutional investors make use of their shareholder’s money to fund the purchase of the asset, a situation that makes their dumping season a very profound and unexpected one.

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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.

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About Author

Godfrey Benjamin is an experienced crypto journalist whose main goal is to educate everyone around him about the prospects of Web 3.0. His love for crypto was birthed when as a former banker, he discovered the obvious advantages of decentralized money over traditional payments.

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