25.10.2021

Large professional investors buy bitcoins and other cryptocurrencies

Bitcoin has recently set a new all-time high and continues to do so, but large cryptocurrency investors do not even want to think about the likelihood of a fall in its price.

According to analysts, institutions – that is, professional investors with huge amounts of money in management – are still actively buying bitcoins through OTC transactions in order to have less influence on the value of a coin on crypto exchanges. In other words, many of them are confident in the long-term growth of BTC.

Let us remind you that OTC transactions are understood as transactions that are carried out without intermediaries, that is, between the parties to the transaction directly. Most often, large players participate in such operations and significant amounts of cryptocurrencies appear.

Thus, sales and purchases do not affect the price of the coin. At least as serious as it would be in the case of purchasing a similar volume of coins through exchanges.

Large investors are taking over the cryptocurrency industry

Unlike individual investors or small organizations using cryptocurrency exchanges, large companies usually trade bitcoins through the OTC market. The information is confirmed by John Todaro, director of institutional research at the analytical firm TradeBlock. Thus, their transactions do not affect prices in the same way as if investors were using even the largest centralized exchanges.

One reason for this is that OTC trades are also much more opaque compared to trading on exchanges. Accordingly, everyone will not be able to find out about the activity of large investors. However, three metrics tracked by market research firm CryptoQuant give us some insight into exactly what is happening in the OTC cryptocurrency market.

According to CryptoQuant CEO Ki Yong Joon, when there is a massive outflow of bitcoins on Coinbase Pro, they are usually sent to storage in the exchange’s own cold wallets. Here is a comment from the experts, cited by Coindesk.

We know that these coins do not go to hot wallets, we have a list of their addresses. Withdrawals by exchange users can occur, but I would say that 99 percent of large individual transactions in excess of 5,000 BTC are either internal transfers or are sent to wallets for safekeeping.

The volume of coins withdrawn from Coinbase Pro. Sharp spikes in findings point to alleged OTC whale deals

For example, the spike in bitcoin churn on December 12 of this year shows that between 8,000 and 15,000 BTC were transferred from Coinbase Pro to other cold wallets. Key is confident that this is a clear sign of the OTC deal. In addition, both MicroStrategy and UK-based investment firm Ruffer have reported that their hundreds of millions of dollars worth of investments in the main cryptocurrency were made using Coinbase.

Another metric to gauge – the rate of flow of funds across all exchanges – has declined since the massive Bitcoin crash in March. Recall that this is the ratio of the volume of exchanges transactions to all other transfers. That is, the lower this indicator, the higher you can assess the activity of investors in OTC transactions, the coins from which are not “shining” on the exchanges.

The third indicator is the total amount of transferred bitcoins. He also shows significant growth. All this together speaks of the willingness of “whales” and large institutional players to take risks. They buy bitcoins in order to hold them for a relatively long time, which means that a very large-scale bull run is ahead of us. If large investors were not sure about the growth potential of cryptocurrency, they would hardly have contacted it for a long time – and indeed.

We believe that these analysts’ data can be safely ranked as positive news. Large investors with millions of dollars at their disposal not only buy cryptocurrency, but also bypass the market so as not to raise the price too early. And since professionals are ready to enter the industry with the same Bitcoin more expensive than $ 20 thousand, then their goals for asset growth are much higher. Well, this indicates a positive outlook for the niche as a whole.

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