Crypto

Cryptoverse: Bleeding Bitcoin is waiting for a hero. – Democrat Blog

Who can save bitcoin?

The largest cryptocurrency in the world does not seem to have a breather. It finally regained strength this month, topping $25,000 for the first time since the June crash, but then dropped back to $20,000.

The deflationary end of August left the market wondering about the big question for bitcoin: where will the real recovery come from?

Retail investors are now the most likely source of relief as institutional players show uncertainty in the macroeconomic whirlpool.

According to Chainalysis, the number of “illiquid bitcoins” on the market, held in wallets that are rarely spent or sold, has risen by 73,840 bitcoins in the last week, the biggest weekly increase in more than two months. At the latest prices, this is about $1.7 billion.

In addition, the number of bitcoins held for more than a year has increased by an average of 54,300 over the past four weeks, the largest increase in about four months, Chainalysis reports. Meanwhile, according to Arcane Research, cryptocurrency exchanges have seen sharp outflows for three consecutive months as investors put their tokens into “cold storage” rather than selling them.

“It is clear that long-term holders at the retail level are also accumulating, the number of wallets holding relatively small amounts of bitcoin is really increasing,” said Jay Frazier, chief strategy officer at the BSTX value exchange.

“Don’t underestimate the impact of retail hodlers,” Frazier added, referring to the cohort whose name came up years ago because a trader misspelled “hold” in an online forum. “The lack of sales helps create even more scarcity, so that eventually there will be a bitcoin supply shock again. »

INSTITUTIONS GO FROM THE MARKET

What about those institutional players with deep pockets who jumped on the cryptocurrency bandwagon when prices were high?

According to some market participants, it is these large investors who have become the main driving force behind the fall of cryptocurrencies over the past few months.

In the week of Aug. 19 — the week that Bitcoin fell again — digital asset investment products favored by traditional institutional financial players saw an outflow of about $9 million, according to data from Coinshares.

“The laggards — those institutions that have come close to the $30,000 to $50,000 highs or levels — are basically the ones that have driven the market down,” said Ed Hindi, chief investment officer at Tyr Capital Partners.

Hindi pointed to the sharp discount between futures prices and the spot price of bitcoin in the CME market as further evidence of an institutional downturn.

The discount on the most traded contract hit an all-time low of 3.36% last week, according to analysts at Arcane Research.

READY TO BUY

Bitcoin has lost 70% of its value since hitting an all-time high of $69,000 in November and 56% since the start of 2022.

Some market watchers point to the decision by BlackRock, the world’s largest asset manager, to launch a private bitcoin investment product specifically for institutional investors as a strong sign that demand remains high and could emerge from the cryptocurrency crisis.

Andy Edstrom, managing director of Swan Advisor Services, said his company continues to show interest from financial advisors and their clients in investing in bitcoin despite some decline in “fair weather interest.”

Some advisors are willing to buy the dip, they tell us, “I have dry powder to invest in $20,000 bitcoins,” he added.

(This story has not been edited by the blogdudemocrate.org staff and is automatically generated from a syndicated feed).

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