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Coinbase saw a sharp surge in overnight buyer activity as the price of Bitcoin (BTC) surpassed $ 32,500 on January 2. Analysts say the trend was reminiscent of MicroStrategy’s build-up of Bitcoin, likely fueled by institutional buy orders. As a result, BTC surpassed $ 31,000, hitting a new all-time high.
Coinbase buyers were the catalyst for the Bitcoin rally
Over the past 48 hours, Coinbase has continually seen a high premium over Binance. At one point, Bitcoin on the exchange was $ 100 more expensive than on Binance.
When the price of Bitcoin exceeded $ 30,000, the premium reached $ 350. For example, when Bitcoin was trading at $ 30,000 on Binance, BTC was priced at $ 30,350 on Coinbase.
Ahead of the rally, CryptoQuant CEO Ki Young Ju said weak Coinbase exits posed a risk to the Bitcoin rally. He said exits would need to increase for BTC to find new momentum, which it did. he said before the rally:
“We haven’t had any significant exits in Coinbase for $ 23,000, tokens transferred are decreasing and the cash flow ratio for all exchanges is increasing. There is always a possibility that institutional investors will join soon, but we could face a correction if it continues like this.
As Bitcoin approached $ 29,500, Coinbase’s outflows started to increase. Ki said these are possible over-the-counter (OTC) deals, which are generally bullish for BTC and illustrate a wider trend of decreasing BTC reserves on the exchanges.
While we are pumping another 34K btc was taken out of the exchange in the last blocks pic.twitter.com/8r20JnOGaj
– // Bitcoin acknowledgment (@BTC_JackSparrow) January 2, 2021
Wealthy buyers use the OTC market to buy or sell large amounts of Bitcoin. Therefore, when the signs of TBT deals appeared, Ki said it was positive for BTC. Just two days after the exits skyrocketed, BTC surpassed $ 30,000, reaching $ 31,400. Ki noted before BTC broke $ 30,000:
“$ 12,063 BTC just came out of #Coinbase. He went to several cold wallets. Maybe OTC offers. Breaking 30k will be difficult, but institutions don’t care. They just buy it more.
Why is BTC becoming so attractive?
According to Ashwath Balakrishnan, analyst at Delphi Digital, Bitcoin became more convincing when it broke its all-time high.
When the price of Bitcoin hovered around $ 4,000, the risk of a significant drop was high, combined with high uncertainty around BTC’s medium-term outlook.
Therefore, when Bitcoin surpassed $ 20,000, the dominant cryptocurrency became more attractive to investors. he said:
“Buying $ BTC after ATH is actually greater than cutting off the bottom of a risk-adjusted lens. was much higher.
In the short term, a popular narrative that could drive Bitcoin’s price higher is the prediction that institutions may not have bought BTC in December due to potential accounting issues.
As such, some analysts say more institutions could jump into Bitcoin in the first quarter of 2021. If that happens, which would be evident thanks to Grayscale’s assets under management and the open interest in the futures market. of CME Bitcoin, it would likely lead to a broader rally in BTC. .
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