The current Bitcoin (BTC) rally was mainly driven by institutionsAccording to analysts, key figures such as Open Interest from CME and AUM (Grayscale Assets Under Management) support this representation.
At the same time, The gold market has seen major exits in the past few weeks. The independent financial researcher Jan Nieuwenhuijs reported on it on November 24th Gold was on its greatest weekly outing in history.
The biggest gold deal in history. pic.twitter.com/Re4o3PHrel
– Jan Nieuwenhuijs (@JanGold_) 23rd November 2020
The timing of the rise in gold market outflows is noteworthy as it comes after large institutional investors entered the Bitcoin market.
Cointelegraph reported that Guggenheim Partners, which manages $ 275 billion in assets, is the latest institution to show interest in Bitcoin.
What does this mean for Bitcoin?
In the medium and long term, the inflow of institutional capital into Bitcoin could lead to two main trends.
First, Bitcoin could see a more sustained upward trend that began in September. Institutions, especially those that They are known for BTC through the Grayscale Bitcoin Trust and are likely hoarding BTC with a long term strategy.
Some long-term Bitcoin investors who have held gold positions for long periods of time have also started to allocate their capital entirely to BTC. Raoul Pal, the CEO of Real Vision Group, said::
“Ok, last bomb: I have a sell order tomorrow to sell all of my gold and my scales to buy BTC and ETH (80/20). I don’t have anything else (other than a few bonus calls and a few dollars). 98% of my net worth. You can only classify me as “irresponsible in the long term”. Good night everyone.”
Second, Fund managers say this could make Bitcoin even more dominant in the cryptocurrency marketto. Currently, Bitcoin’s market capitalization makes up 63.83% of the valuation of the global cryptocurrency market.
Kyle Davies, Co-Founder of Three Arrows Capital, one of the largest funds in the crypto sector, said::
“Nobody thinks that gold -> BTC -> altcoins. This year there have been large inflows of USD or gold into BTC. This is not a retail sale. These guys won’t go on the air. “
BTC’s short-term trend remains uncertain
Bitcoin has seen strong momentum over the past three months and hardly seen any major corrections.
During past bull cycles, it is not uncommon for BTC to see 30% pullbacks, and the most recent run has not yet resulted in a sharp decline. But, In the short term, analysts say BTC could prepare for a deeper decline.
Ki Young Ju, the CEO of CryptoQuant, said that Whales hold more BTC on exchanges than in the past few months. This could indicate that whales may be selling more BTC in the near future. The said::
“The fact that the whales are not retiring means that BTC is available for sale. If the whales believe the price will go up, they will take off a lot of BTC. I don’t know when it will start but when the price falls the whales will react to the price and cause high volatility. “
If demand from institutional buyers and their Time Weighted Average Price (TWAP) algorithms counteracted the pressure to sell whales, it would likely determine BTC’s short-term price cycle.
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