BlocksInform
Bitcoin (btc) has its strongest year-round start since 2013. The price of the largest cryptocurrency by market cap surged 40% this month against a backdrop of a weak US dollar. The rally was fueled mainly by buyers on the government side, say observers.
- "Bitcoin is up 40% year-on-year so far with 35% of these returns happening during trading hours in the United States. This represents an 85% contribution to the U.S.-based investor rally," Markus Thielen, Responsible for researching and strategizing within the crypto service provider matrix, told customers in a note on Fridays.
- "We interpret this as a clear signal that American institutions are Bitcoin buyers at this time,' Thielen added.
- Bitcoin skyrocketed by 51 percent in January 2013.
- In contrast to equities, Bitcoin – and cryptocurrencies in general – trade around the clock, allowing observers to track order flows in different timeframes and infer the source of buy or sell pressure.
- Institutions' bullish positioning is also evident from the renewed premium in bitcoin futures listed on the Chicago Mercantile Exchange.
- "Institutions don't just buy Bitcoin spot; instead, we also constantly see high premiums for perpetual futures. We interpret this as an indication that institutional traders and hedge funds are actively buying the recent decline in crypto markets," thielen said.
- Deutsche Digital Assets made a similar observation earlier this month, drawing attention to the uptick in Coinbase premium as evidence of increased buying interest from sophisticated U.S.-based investors relative to retail investors.
- "traditional and crypto-oriented hedge funds, traditional companies and asset managers have been purchasing," COINBASE institutional research leader david guong wrote in a weekly market commentary published Jan. 20.
- Bitcoin's institution-led bullish turnaround might be a good sign for the U.S. equity market, considering the cryptocurrency's record of bottoming out weeks ahead of the S&P 500.
