[ad_1]
The ongoing Bitcoin (BTC) rally has been primarily driven by institutions, analysts say, with metrics such as CME’s open interest and Grayscale’s assets under management (AUM) supporting this narrative.
At the same time, the gold market has seen significant exits in recent weeks. On November 24, independent financial researcher Jan Nieuwenhuijs reported that gold had its biggest weekly outflow in history.
The biggest gold release ever. pic.twitter.com/Re4o3PHrel
– Jan Nieuwenhuijs (@JanGold_) November 23, 2020
The timing of the increased level of exits from the gold market is noteworthy as it comes after the entry of large institutional investors into the Bitcoin market.
Cointelegraph reported that Guggenheim Partners, which manages $ 275 billion in assets, is the latest institution to take an interest in Bitcoin.
What does this mean for Bitcoin?
In the medium to long term, the influx of institutional capital into Bitcoin could lead to two key trends.
First, Bitcoin could see a more sustained uptrend that has emerged since September. Institutions, especially those exposed to BTC through the Grayscale Bitcoin Trust, are likely accumulating BTC with a long-term strategy.
Some long-time Bitcoin investors, who had held positions in gold for long periods of time, also began to fully allocate their capital to BTC. Raoul Pal, CEO of Real Vision Group, said:
“Ok, last bombshell – I have a sell order tomorrow to sell all my gold and scale up to buy BTC and ETH (80/20). I don’t own anything else (except a few bond calls and $). 98% of my cash net worth. See, you can’t rank me except #irresponsiblylong Good night everyone. “
Second, fund managers say it could make Bitcoin even more dominant in the cryptocurrency market. Currently, Bitcoin’s market cap represents 63.83% of the global cryptocurrency market valuation.
Kyle Davies, co-founder of Three Arrows Capital, one of the largest funds in the cryptocurrency industry, said:
“Nobody goes to gold -> $ BTC -> alts This year has seen big, wealthy net inflows from USD or gold to BTC. It is not retail. These guys don’t go for ripples.
Short term BTC trend remains uncertain
Bitcoin has seen strong momentum over the past three months, barely seeing any major corrections.
In previous bull cycles, it’s not uncommon for BTC to experience 30% pullbacks, and the recent period has yet to see a major slowdown. But, in the near term, on-chain analysts say BTC could be prepared for a deeper drop.
CryptoQuant CEO Ki Young Ju said whales are keeping more BTC on exchanges than in recent months. This could indicate that whales could sell more BTC for the foreseeable future. he said:
“The fact that the whales are not retreating means that $ BTC is available for sale. If the whales think the price will increase, they will withdraw a lot of BTC. I don’t know when it will start, but if the price drops, the whales will react to the price and create a lot of volatility.
Whether demand from institutional buyers and their Time Weighted Average Price (TWAP) algorithms would counter selling pressure from whales would likely dictate the short-term price cycle of BTC.
[ad_2]
Source link