Recently, significant amounts of bitcoins have been leaving the largest American cryptocurrency exchange Coinbase. According to the CEO of the analytical platform CryptoQuant, Ki Yong Joo, this may be evidence of the asset’s readiness to grow further.
According to the platform, just the day before yesterday, more than 15,200 BTC, or about $ 500 million at the current exchange rate, left Coinbase Pro. Joo is sure that the main reason for the outflow of coins can be the high activity of large investors who are intensively buying up cryptocurrency. Well, given the limitations of the main cryptocurrency asset, this should noticeably affect its value.
First, a little explanation. Representatives of the cryptocurrency community are actively monitoring what is happening with the wallets of popular exchanges, since it is usually their services that large companies use to purchase coins. The latter do not buy crypto on exchanges directly for a very simple reason: the massive purchase of cryptocurrency on the trading floor can lead to an increase in the rate, and investors are interested in acquiring an asset at a lower price. Therefore, they use the so-called OTC trading, that is, transactions outside the exchanges in the usual sense of this process.
Sending a large batch of cryptocurrency from an exchange wallet can really mean buying coins for a large company, because this has happened before. Specifically, MicroStrategy acquired its first batch of $ 425 million of bitcoins through Coinbase. Now the giant has more than 71 thousand BTC at its disposal.
And since such companies usually invest in the long term, analysts see their actions as positive for the entire market. In fact, the bitcoins they bought are out of circulation for a long period of time, and it simply won’t be possible to “print” the required number of coins. Hence the talk about a possible shortage of cryptocurrency and its growth to incredible heights.
Will Bitcoin grow
Here is a quote from an expert on this subject, in which he shared his attitude to what is happening. The cue is from Decrypt.
Bitcoin has moved into storage in wallets that only carry out ongoing transactions. Most likely, these will be OTC transactions of institutional investors. I believe this is the strongest bullish signal.
A bullish signal is an indication that an asset is ready to rise. Bulls traditionally lift the market up, and their opposite – bears – send it down.
According to Ju, this outflow of bitcoins was carried out through transactions ranging in size from about 1,100 BTC for $ 35 million to 4,400 BTC for $ 150 million. While these could be transactions between different wallets of the same exchange, they usually have no reason to split large wallets into smaller ones. In addition, Coinbase’s custodian service is integrated with its OTC platforms, which makes it more likely that BTC OTC trading is likely to revive.
Although large investors use OTC platforms in order to minimize the impact on the price of Bitcoin, their activity can still affect the value of the main cryptocurrency. This is because markets tend to counterbalance themselves, so when the supply of something shrinks and demand from retail investors stays the same, OTC trades can push prices up anyway, albeit with a delay.
Meanwhile, Bitcoin has set a new all-time record over the past few days. This time we are talking about the activity of the cryptocurrency network. According to the analytical platform Glassnode, the number of active BTC wallets has reached an all-time high. In January of this year alone, 22.3 million addresses were active, while the previous record was set at 21.6 million addresses back in December 2017, when Bitcoin peaked in value at that time.
Accordingly, the participants in the Bitcoin network use it more actively than ever, which indicates a significant increase in the popularity of the cryptocurrency.
From the point of view of analyzing what is happening on the market, the coin industry really should give out a new stage of growth after a correction that has been going on for several weeks now. Naturally, we are talking about the usual purchase of BTC without leverage. If you still want to familiarize yourself with the topic of margin trading, we advise you to read our course of articles on this topic.
We checked the actual data: there are really few bitcoins on cryptocurrency exchanges now, as never before. According to analysts at Glassnode, the volume of the first cryptocurrency on trading platforms is at an all-time low in the last 2.5 years. This means that the owners of the coins withdraw them for self-storage, which is most often carried out using the so-called hardware wallets.
We believe that what is happening in the blockchain asset industry is indeed indicative of a good niche position. Bitcoin is increasingly in demand by large players who are investing hundreds of millions of dollars in it, while ordinary people are also gradually catching up to investments. There is every reason to believe that the current race of the market will continue for a long time.
