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100K BTC Glut Ignites “Buy the Dip” Frenzy: Institutions Back In?

DailyCoinDailyCoin2024/07/13 11:22
By:DailyCoin
  • Bitcoin’s drop has put short-term holders underwater.
  • Data has shown an increase in panic selling by novice investors.
  • Many institutional investors have been buying the dip.

Blood ran red in the streets of the cryptocurrency market this June. Bitcoin’s price plummeted by 23%, sending shivers down the spines of even the most seasoned investors. For many, it was a time to cut their losses and run. 

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But then there were the whales – the institutional investors with a taste for digital gold. Unfazed by the downturn, they saw an opportunity, not a disaster. New data reveals a surprising truth: institutional investors went on a massive buying spree while the market panicked.

Who’s Buying the Bitcoin Drop?

Last week, buying activity remained robust despite Bitcoin plummeting to its lowest levels since late February. The total increase surpassed 100,000 BTC, valued at approximately $5.7 billion.

Bitcoin Large Holder Balance Data. Source: CryptoQuant

This trend starkly contrasts the behavior of many new investors who, according to CryptoQuant data, panicked and sold their holdings during the price decline. While many novice investors capitulated last week, institutional players engaged in their largest accumulation process since March.

The buying spree by institutional investors is particularly noteworthy because it coincides with a period of subdued activity in Bitcoin exchange-traded funds (ETFs) . Unlike the record inflows witnessed in March, which were largely driven by ETF launches, the current accumulation appears to be a more fundamental “buying the dip” strategy by large investors. 

US Spot Bitcoin ETF Netflows. Source: Farside

This is further supported by the fact that daily inflows are significantly lower compared to March’s peak of over $1 billion. Data from Farside shows the highest daily inflow in July to be around $294 million, significantly lower than March’s figures.

Institutions Bullish on Bitcoin Amid “Extreme Fear”

The conviction of institutional investors stands out even when compared to other investor groups. Short-term holders, including recent entrants with larger holdings, are facing significant unrealized losses with the price drop.

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The aggregate cost basis for this cohort, which typically holds Bitcoin for less than 155 days, sits above $64,000, according to Glassnode , an on-chain analytics firm. This means they are currently underwater on their investments.

BTC/USD Chart With Short-Term Holder Cost Basis. Source: Glassnode

While the institutional buying spree is a positive sign for Bitcoin’s long-term prospects, it’s important to acknowledge the broader market sentiment. The Crypto Fear Greed Index, a measure of overall market sentiment, has recently dipped back into “extreme fear” territory for the first time since January, indicating significant anxiety amongst investors. 

On the Flipside

  • Despite institutional buying, many recent investors are facing significant unrealized losses due to the price drop.
  • The current institutional buying surge isn’t fueled by Bitcoin ETF launches like in March, so it’s unclear if it can be sustained.

Why This Matters

Despite a widespread panic sell-off and depressed market sentiment, this significant institutional accumulation suggests a belief in Bitcoin’s long-term potential. This could signal a turning point, where large investors view dips as opportunities, potentially decoupling their behavior from short-term market volatility.

To learn more about how lower inflation might impact Bitcoin’s price, read here:
Bitcoin Nears $60,000 as Lower Inflation Calms Worries

Wondering how upcoming regulatory decisions might affect cryptocurrency? This article explores key events that could set a precedent:
All Eyes on XRP and BTC as U.S. Crypto-Political Events Loom

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Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.

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