Coinbase saw a huge increase in buyer activity overnight, with the price of Bitcoin (BTC) exceeding $ 32,500 on January 2. Analysts say the trend is reminiscent of MicroStrategy’s Bitcoin buildup, possibly fueled by institutional purchase orders. As a result, BTC surpassed $ 31,000, reaching a new historical record.
Coinbase buyers were the catalyst for the Bitcoin rally
Over the past 48 hours, Coinbase has continuously seen a high premium compared to Binance. At one point, Bitcoin on the exchange was $ 100 more expensive than on Binance.
When the price of Bitcoin exceeded $ 30,000, the prize reached $ 350. For example, when Bitcoin was traded at $ 30,000 at Binance, BTC was quoted at $ 30,350 at Coinbase.
Before the rise, CryptoQuant CEO Ki Young Ju said that low outflow from Coinbase posed a risk to the rise of Bitcoin. He said that exits would have to increase for BTC to find new momentum, which it did. He said before the rally:
“We haven’t had any significant outflows from Coinbase since $ 23,000, transferred tokens are decreasing and the flow rate of funds for all exchanges is increasing. It is still possible for institutional investors to join anytime soon, but we may face a correction if it continues. “
As Bitcoin approached $ 29,500, Coinbase’s outgoing flows started to skyrocket. Ki said that over-the-counter (OTC) negotiations are possible, which are typically optimistic for BTC and exemplify a broader trend of decreasing BTC reserves on the exchanges.
While pumping, another 34K btc was casually removed from the exchange in the last few blocks pic.twitter.com/8r20JnOGaj
– // Bitcoin ack (@BTC_JackSparrow) January 2, 2021
High net worth buyers use the OTC market to buy or sell large amounts of Bitcoin. Therefore, when OTC business signals appeared, Ki said that this was positive for BTC. Just two days after the peak of departures, BTC exceeded $ 30,000, reaching $ 31,400. Ki noted before BTC broke $ 30,000:
“$ 12,063 BTC just left #Coinbase. It went to several cold wallets. Possibly OTC offers. Breaking 30,000 will be difficult, but institutions don’t care. They just buy more. “
Why is BTC becoming so attractive?
According to Ashwath Balakrishnan, an analyst at Delphi Digital, Bitcoin became more attractive when it surpassed its historical record.
When Bitcoin’s price was hovering around $ 4,000, the risk of a significant drop was high, combined with great uncertainty around BTC’s medium-term outlook.
Therefore, when Bitcoin exceeded $ 20,000, the dominant cryptocurrency became more attractive to investors. He said:
“Buying $ BTC post-ATH is really superior than cutting the bottom of a risk-adjusted lens. If you bought for $ 20k, you went up 50% with minimal friction between lower buyers ~ $ 4k went up almost 8x, but the risk of exploding was much higher. “
In the short term, a popular narrative that could raise the price of Bitcoin is the prediction that institutions may not have bought BTC in December due to possible accounting problems.
As such, some analysts say that more institutions could join Bitcoin in the first quarter of 2021. If that happens, which would be evident through CME’s gray scale assets and open Bitcoin futures market, likely would cause a broader BTC recovery.