Institutional Bitcoin Accumulation Skyrockets As Exchange Balances Plummet

Recently, Institutional investors have been actively accumulating Bitcoin, with the number of BTC whales reaching a one-month high, signaling increased interest from institutional investors. Conversely, the amount of BTC held on exchanges has dropped to the lowest level since March 2018 as investors opt for self-custody solutions.

However, the institutional accumulation of Bitcoin has gained momentum following the filing of a spot BTC ETF application by BlackRock. ByteTree data reveals that funds have rapidly increased their Bitcoin holdings, accumulating nearly 850,000 BTC in June, indicating the beginning of widespread BTC accumulation by traditional finance players.

Growing Institutional Interest In Bitcoin Sparks Market Optimism

The recent surge in institutional interest can be attributed to the growing number of spot ETF applications from prominent financial institutions such as BlackRock and Fidelity. While the approval of a spot BTC product by the US Securities and Exchange Commission (SEC) is still pending, the market sentiment has turned positive in response to these developments.

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MicroStrategy, a prominent institutional investor, recently added 12,333 BTC to its holdings, bringing its total Bitcoin ownership to 152,333. This purchase reflects the unwavering conviction of MicroStrategy’s chairman, Michael Saylor, in the long-term potential of Bitcoin.

Furthermore, the perception of Bitcoin among institutional skeptics has undergone a significant shift. BlackRock CEO Larry Fink, who previously criticized BTC, now views it as an alternative investment to hedge against currency devaluation.

Fink described Bitcoin as a digital version of gold, highlighting its unique properties. Meanwhile, the increased accumulation by institutional investors has coincided with a decline in the amount of Bitcoin held on exchanges.

Glassnode data reveals that BTC balances on exchanges have reached a five-year low of 2.26 million. This trend suggests that investors are increasingly opting for self-custody solutions, indicating that they are more confident in this solution in securing their BTC.

Bloomberg Analyst Warns Of Impending Test For Bitcoin In The Second Half Of 2023

Meanwhile, Bloomberg Intelligence’s senior macro strategist, Mike McGlone, has warned about the upcoming challenges that Bitcoin may face in the second half of 2023. McGlone predicts that Bitcoin will encounter harsh recessionary conditions as the stock market declines.

McGlone suggests that this period will be an actual test for Bitcoin’s role as a store of value or “digital gold.” He notes that Bitcoin’s performance in the first half of the year, where it outperformed the Nasdaq 100 and maintained consistent annual volatility, may be overshadowed by its response to the bearishness in the stock market.

The macro strategist referenced previous recessions where substantial central bank easing had positively affected risky assets like Bitcoin. However, he cautions that the Federal Reserve may be reluctant to ease monetary policy this time due to the persistently high inflation.

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During the second quarter of this year, the crypto market exhibited weakness compared to equities. This weakness was indicated by the decline in the Bloomberg Galaxy Crypto Index (BGCI) despite the Nasdaq 100’s significant gains.

Accordingly, McGlone suggests that this divergence indicates relative weakness for the crypto market, particularly if the stock market continues to post gains. Bloomberg Economists predicts a recession in this year’s second half, including increased US unemployment rates.

They added that these headwinds pose additional challenges for risk assets like Bitcoin.

Author: Owen Clark

Owen Clark, a seasoned crypto newsman and broker, deciphers the intricacies of the digital currency realm, empowering investors with his astute analysis and actionable insights.

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