According to the analytical platform CryptoQuant, the reserves of cryptocurrency exchanges have dropped to values that were last recorded before the Bitcoin crash in May. Experts suggest that such a trend indicates an active accumulation of cryptocurrency – and especially on the part of large investors.
The rapid rise in BTC lately confirms this theory.
Note that the entry of large professional investors or so-called institutions into the cryptocurrency industry was a dream for many during the previous bull run in 2017. Now it is a reality that is beyond doubt.
The trend for the purchase of bitcoins was set by MicroStrategy, which in August 2020 acquired the first batch of cryptocurrency of 21,454 bitcoins for $ 250 million. As a result, as of the moment, the company has invested $ 2.74 billion in BTC, and its total balance is 105,085 bitcoins.
The presence of large investors in the niche is noticeable not only due to public announcements of buying coins. Researchers take information about what is happening from a transparent blockchain, which allows you to track any transactions. This is how analysts understand what the big digital asset players are doing.
Why is Bitcoin growing?
To date, the total reserves of crypto exchanges are hovering around the 1.256 million BTC mark . The last time this value of this indicator was observed on May 11, that is, just a week before the grandiose collapse of the market. Analyst William Clemente noted that the large-scale correction of Bitcoin this spring was not perceived by investors as the beginning of a global bearish trend – on the contrary, they only started buying BTC more actively.
Big money keeps buying.
Recall that bearish trends are not a market correction for two to three months. In this case, we are talking about the gradual subsidence of the niche within one to two years. For example, a full-fledged bear market came after Bitcoin set a local high of $ 20,000 on December 17, 2017, and altcoins showed significant growth in January 2018. It lasted over a year.
The decline in the volume of cryptocurrency reserves is traditionally considered the reason for a new stage of bull run. The explanation is very simple. In this case, investors buy bitcoins and massively withdraw them to their cryptocurrency wallets, as if they do not want to sell coins in the near future.
And since there are few sellers in the market, the asset has more room to grow. In turn, continued growth attracts new investors, which even more affects the value of the asset and its popularity among newcomers.
The situation is clearly shown in the chart below. Notice how the crypto volume on the marketplaces declined rapidly right before the global BTC price jump above $ 60K .
According to the expert, the behavior of the chart of BTC balances of cryptocurrency exchanges resembles the trend that was observed at the end of 2020. Recall that then Bitcoin broke through the resistance at the level of the previous all-time high of $ 20,000 and began to sharply increase in price.
Here is a quote from Clemente, in which the expert shares his attitude to what is happening. The replica is provided by Cointelegraph.
Since May 19, market participants with a balance of 10 thousand to 100 thousand BTC have added about 269,450 BTC to their capital, that is, the equivalent of $ 12.1 billion.
This means that the rapid rebound of the Bitcoin price from the mark of 28-30 thousand dollars demonstrated that this level has become quite attractive for most large investors and forced them to re-enter the market. They still continue to actively accumulate BTC, thereby reducing the number of free coins in circulation.
With a new wave of cryptocurrency popularity, this may well lead to its growth up to a historical maximum. And as soon as Bitcoin overcomes this mark, its rise in price to $ 100 thousand, which was mentioned by Bloomberg analyst Mike McGlone the day before, will remain only a matter of time.
We believe that what is happening in the cryptocurrency market really hints at the continuation of the bull run, which started in the second half of last year. And although now Bitcoin has dropped noticeably compared to yesterday’s local maximum at $ 46,743, this is normal, because any asset cannot grow without corrections. Therefore, in this case, it is better to monitor fundamental indicators such as BTC stocks on exchanges and the activity of large players. They are usually ahead of trends and set the direction of the market.