Major institutional traders may have potentially concluded their Bitcoin (BTC) accumulation phase, paving the way for a bullish trend in the cryptocurrency market.
MAC D, an analyst from onchain metrics firm Santiment recently shared insights into this intriguing development in an August 12 post, noting that this could be rooted in the tumultuous events of the previous year. According to him, the significant crashes experienced in 2022, notably the LUNA and FTX crises, might have provided these institutions with opportunities to amass BTC at lower prices.
He particularly noted that the watershed moment that triggered this speculation dates back to June 15, 2023, when BlackRock, the world’s largest asset manager, surprised the crypto community by announcing the filing of a Spot BTC Exchange-Traded Fund (ETF).
This unexpected announcement departed from BlackRock’s previous stance on cryptocurrencies, leaving many market participants pondering the motives behind this strategic move. Subsequently, these institutions appear to have shifted their focus to releasing positive news and driving sentiment upward during the current year.
“It is possible that traditional financial institutions and major institutions had already completed their accumulation of BTC during the two crashes in 2022 (LUNA and FTX) and concentrated on releasing positive news in the middle of this year,” wrote MAC D.
The pundit further highlighted two pivotal points to support his theory. The first involves the analysis of BTC transfers. Historically, major accumulations of Bitcoin through over-the-counter (OTC) transactions have coincided with market bottoms. However, this year, despite BTC’s 100% surge from its October 2022 lows, there has been a conspicuous absence of large-scale OTC transactions. According to MAC D, this absence suggests that institutional investors might have already completed their BTC accumulation, negating the need for further trades. Notably, significant Bitcoin transactions surged during the LUNA and FTX crises last year, reinforcing the theory.
The second indicator revolves around changes in Bitcoin’s velocity patterns. Observing historical data, it’s evident that Bitcoin’s velocity typically accelerates with substantial trading activity around the same time last year, the pundit explained. However, this time around, the absence of substantial trading could be attributed to institutional investors finalizing their accumulation earlier, making even small trades capable of influencing prices due to limited liquidity.
Meanwhile, speculation is rife that the low point of $15,700, believed to be the result of institutional accumulation, might signal the trough of this market cycle. According to got MAC D, if the observed trends of increased token transfers and accelerated velocity continue to align with price upticks in the coming months, it could very well foretell the onset of a bullish rally.
At press time, Bitcoin was trading at $26,485 after a 9.1% decrease in the past 24 hours, as per CoinMarketCap data. According to popular crypto analyst Ali Martinez, the price is, however likely to face key resistance between $29,660 and $30,540 where 2.09 million addresses bought 874,570 BTC.