Coinbase saw a huge surge in buyer activity early this morning as the price of Bitcoin (BTC) topped $ 32,500 on Jan. 2. According to analysts, the trend was reminiscent of MicroStrategy’s Bitcoin build, which may have been fueled by institutional buy orders. As a result, BTC topped $ 31,000 and hit a new all-time high.
Coinbase buyers were what triggered the rise in Bitcoin price
In the last 48 hours Coinbase has consistently seen a high premium compared to Binance. At one point the price of Bitcoin on the exchange was $ 100 more expensive than Binance.
When the price of Bitcoin exceeded $ 30,000, the premium hit $ 350. For example, when Bitcoin was trading at $ 30,000 on Binance, the price of BTC on Coinbase was $ 30,350.
Before the rally, the CEO of CryptoQuant, Ki Young Ju said that low exits from Coinbase put Bitcoin’s returns at risk. He said the outputs needed to be increased in order for BTC to find new stimulus, which it did. Ki said before the rebound:
“We haven’t seen any significant outflows from Coinbase since $ 23,000, the tokens transferred are declining and the fund flow rate from all exchanges is increasing. Institutional investors may join soon, but we could see a correction if this continues. “
As Bitcoin neared $ 29,500, Coinbase outflows began to increase. Ki said that out-of-market (OTC) deals are possible, which are typically bullish about BTC and exemplify a broader trend towards the decline in BTC reserves on the exchanges.
While we are pumping, another 34K BTC has been casually taken from the exchange in the last few blocks pic.twitter.com/8r20JnOGaj
– // Bitcoin ack (@BTC_JackSparrow) January 2, 2021
As we were pumping, another 34K BTC casually pulled from the exchange in the last few blocks.
Wealthy buyers use the OTC market to buy or sell large amounts of Bitcoin. When the signs of OTC deals surfaced, Ki said this was positive for BTC. Just two days after the outflow increased, BTC topped $ 30,000 and soon hit $ 31,400. Ki pointed out before BTC broke $ 30,000:
“$ 12,063 BTC just left #Coinbase. They went to several cold wallets. Possibly OTC offers. Breaking the 30,000 will be difficult, but the institutions don’t care. You just buy it more. “
Why is BTC becoming so attractive?
according to Ashwath Balakrishnan, Delphi Digital Analyst, Bitcoin became more attractive as it passed its all-time high.
When the price of Bitcoin was at $ 4,000, the risk of a significant decline was high, combined with great uncertainty about the medium-term prospects for BTC.
When Bitcoin managed to break over $ 20,000, the dominant cryptocurrency became more attractive to investors. Said::
“Buying $ BTC after its all-time high is actually better than sighting the floor with a risk-adjusted lens. If you bought at $ 20,000 you are up 50% with minimal friction between the bottom buyers ~ $ 4,000 is nearly eight times higher but their risk of explosion was much higher. “
In the short term, a popular narrative that could drive the price of Bitcoin soaring is the prediction that Institutions may not have bought BTC in December due to possible accounting issues.
Some analysts therefore say that more institutions could switch to Bitcoin in the first quarter of 2021. If so, it would likely result in a broader rally for BTC, as evidenced by Grayscale’s assets under management and CME’s bitcoin futures market’s open interest.