The price of Bitcoin (BTC) fell below the support level of $ 18,000 on November 22.
The data suggests that growing institutional demand was likely one of the main catalysts for BTC’s price hike to $ 18,965.
According to Skew’s data, Grayscale Bitcoin Trust’s volume in the OTC markets increased significantly in the fourth quarter.
OTC Markets is a stock exchange in the United States that allows institutional and accredited investors to purchase various securities. The Grayscale Bitcoin Trust trades on the OTC markets, like an exchange-traded fund (ETF).
This is a Bitcoin rally led by an institution
There is a clear difference between the current uptrend and the 2017 rally. This time Bitcoin has shown more poise and stability throughout the uptrend, consecutively recovering major resistance levels.
Bitcoin has seen a sharp rise in spot volume, open interest in futures trading, and institutional demand. Yet various metrics such as Google Trends have shown that general interest in Bitcoin is relatively low.
The combination of the two aforementioned factors suggests that institutions were probably the main driver of the recent rally.
The strong involvement of institutions in a prolonged Bitcoin rally is optimistic as institutions are likely to accumulate BTC with a long term strategy.
This trend explains why most of Bitcoin’s major declines in November were bought aggressively. As TBEN reported, Dan Tapiero, co-founder of 10T Holdings, said “the big guys are going to buy dips now”.
Tapiero also pointed out that the real fundamentals are driving the current rally, unlike the mania of 2017. He said:
“The third wave will eclipse the movement of 2017 and is expected to persist for several years.”
Billionaire Bitcoin investor Michael Novogratz also said that Bitcoin has become an institutional asset along the way.
In recent months, more and more institutions, hedge funds, and investment banks have started comparing BTC to gold. Novogratz said on TBEN:
“Bitcoin is now an institutional asset. Period. The good thing is that most of the institutions are not there yet. This is why 2021 will be as good or better than 2020. “
3 groups of whales to watch as BTC dives under $ 18,000
Whales, or wealthy investors, typically use OTC and exchanges simultaneously to accumulate Bitcoin.
Throughout November, analysts at chain analysis firm Whalemap uncovered the emergence of large groups of whales.
Whale clusters are price points where whales buy BTC and don’t move their holdings. Clusters often mean areas where whales buy Bitcoin.
Whalemap data shows that $ 16,411, $ 16,278 and $ 15,691 remain the large clusters of whales. Therefore, even though BTC sees a short-term pullback, the aggressive build-up of whales in November established crucial support areas.
In the near term, after the recent minor correction in BTC from $ 18,865 to less than $ 18,000, whale clusters are expected to be significant support levels. The price points of $ 17,300 and $ 16,411 remain the main support levels.