June 26, 2024 at 15:25 GMTModified date: June 26, 2024 at 15:25 GMT
June 26, 2024 at 15:25 GMT

Market dip ignites strong buying from major Bitcoin investors

The increased buying activity suggests that these large investors view the recent lows as an opportunity for further accumulation, despite widespread FUD in the market.

Market dip ignites strong buying from major Bitcoin investors

Recent on-chain data has revealed that significant Bitcoin ($BTC) holders have been actively buying amidst market concerns following the latest crash.

According to market intelligence platform IntoTheBlock, the largest wallets on the Bitcoin blockchain have shown notable net inflows recently. 

The key indicator here is the “Large Holders Netflow”, which tracks the net amount of Bitcoin entering or exiting wallets owned by “Large Holders”. These investors are defined as those owning at least 0.1% of Bitcoin’s total circulating supply. 

With over 19.7 million $BTC tokens in circulation, this equates to around 19,700 $BTC, or approximately $1.2 billion at the current exchange rate.

Monitoring the behaviour of these large holders is crucial as it can provide valuable insights into market sentiment. 

Even though their actions might not directly influence Bitcoin’s price, they can signal the confidence levels of these major players. 

A recent chart shows that the Bitcoin Large Holders Netflow has remained above zero over the past few weeks, indicating that these investors have been receiving net deposits to their wallets. 

This accumulation has occurred during a period of bearish market trends, culminating in a recent price crash where Bitcoin dipped below $60,000.

During this crash, large holders significantly increased their holdings, purchasing a net amount of 7,130 $BTC during the dip, which is valued at nearly $439 million. 

This strong buying activity suggests that these large investors view the recent lows as an opportunity for further accumulation, despite widespread fear, uncertainty, and doubt (FUD) in the market.

At the same time, another potential bullish development has been observed in the market. 

IntoTheBlock’s Head of Research, Lucas, pointed out in a recent post on social media platform X that large USD Coin ($USDC) inflows were recorded at exchanges. 

Investors typically transfer their coins to exchanges when they intend to trade them. Therefore, these substantial $USDC net inflows imply that a significant amount of the stablecoin is poised to be swapped, possibly for Bitcoin or other cryptocurrencies.

These $USDC net inflows, amounting to $228 million, could indicate a considerable buying pressure for Bitcoin. When large sums of stablecoins like $USDC move to exchanges, it often precedes increased trading activity.

This potential surge in trading could positively impact Bitcoin’s price, adding to the buying momentum created by the large holders.

Bitcoin ETF inflows

Currently, Bitcoin’s price is around $61,500, having declined over 4% in the past week. 

However, there is a positive sign for investors as net inflows in US spot Bitcoin ETFs have exceeded net outflows by $31 million for the first time in two weeks. 

This increase in institutional confidence has coincided with Bitcoin recovering from a low of $59,495 to its current level, marking a 3.5% rise after breaching the $60,000 mark.

Fidelity’s FBTC fund recorded the highest inflow of $49 million, while Bitwise’s BITB fund saw an inflow of $15 million. 

In contrast, Grayscale’s GBTC fund registered the highest outflow of $30 million. The previous five trading sessions saw major sell-offs, with net outflows reaching $714 million. 

This sell-off intensified on 24 June when Mt. Gox trustees announced that reimbursements to creditors would begin soon.

Another factor contributing to Bitcoin’s price increase is the liquidation of derivatives. 

Nearly $62 million worth of short positions were liquidated, which accounted for the vast majority of total liquidations in the past 24 hours. 

A trading desk note from Off the Chain Capital talked about how Mt. Gox creditors might not be eager to sell their decade-old Bitcoin holdings immediately upon receiving them.

The CEO of Off the Chain Capital, Brian Dixon, suggested that many claim holders might prefer to retain their Bitcoin as a long-term store of value rather than selling it immediately.

He added that Bitcoin has matured considerably since Mt. Gox filed for bankruptcy in 2014.