Bitcoin Nearing 50-Day Moving Average; Whales’ Are Back to Buying
Bitcoin continues to be range-bound around $32,000 and in a downtrend ever since the leading digital asset peaked around $42,000 earlier this month. Now that Bitcoin is nearing its 50-day moving average, it is bringing out some top calls. Michael O’Rourke, chief market strategist at JonesTrading said,
“If Bitcoin breaks below and then stays below the 50-day moving average, it should serve as confirmation that the move over the past four months was a speculative blow-off top.”
Meanwhile, Coinbase whales seem to be back to buying Bitcoin as the premium rises up.
“BTC is stuck in a range within a range: 29K-35K. It can break either way. The key reason I lean bullish is interest rates. Exuberance has rinsed off the system dramatically, as reflected in falling rates. This is a bull market, and traders are now bearish. That's bullish,” noted crypto trader and economist Alex Kruger.
While the mainstream media and experts have started to question Bitcoin’s ability to break out higher, the institutions were busy buying the dips last week.
As we reported, a record amount of $1.31 billion of investment inflows was reported, with 97% of it flowing into Bitcoin, as per CoinShares’ report.
While the decline in the price of Bitcoin has the AUM of the funds including Grayscale and CoinShares sliding from their record high on Jan 8, the day Bitcoin hit ATH; Bitcoin saw $1.26 billion of record inflows while $34 million was registered by Ethereum ETH -3.34% Ethereum / USD ETHUSD $ 1,647.65
-$55.03-3.34% Volume 25.99 b Change -$55.03 Open $1,647.65 Circulating 114.82 m Market Cap 189.18 b 21 min The Premium on Grayscale's GBTC and ETHE Falls to Their Lowest Level Ever 18 h Users Asked to Return Bitcoin Purchased After Glitch Drops The Price to $6,000 On This Exchange 20 h CoinShares Launches Ethereum-Backed ETP to Satisfy Investors' Crypto Demand .
The herd is still coming with the world’s largest asset manager, BlackRock, filing to add bitcoin futures to the list of eligible investments for two of its funds. And other asset managers are likely to follow in its footsteps.
“Large institutional investors are going to be able to tap into the futures market in a way that a retail investor could not do,” said Todd Rosenbluth, director of mutual fund research at investment research firm CFRA who sees Bitcoin become part of asset managers’ macro strategy as the crypto market becomes more developed.
Not to mention, a small exposure to the crypto asset can bring in heightened returns for these funds. It is fast becoming a career risk for them to not allocate to crypto. Arthur, an investor in DeFianceCapital who expects some of the top hedge funds by AUM to be crypto native funds by the end of this cycle, noted,
There is a “big” gap “in terms of edge and understanding of crypto between crypto native funds and traditional hedge funds. They are also sleeping on how big some of us have become.”
[Insert avg. HF returns for the past 10 years]
You think they won’t come chasing for yield when they see one of their peers jump into crypto (even w/ small BTC allocation; let alone ETH & DeFi) and outperforms the rest?
These guys claim fame by beating the index by 5%. LOL
— Santiago R Santos (@santiagoroel) January 22, 2021
Additionally, the macro environment is favorable to the cryptocurrency market with money printing and rock-bottom interest rates. Chris Gaffney, president of world markets at TIAA Bank says,
“There’s just a ton of money looking for somewhere to invest and not wanting to go invest more into negative real yields and equity markets that are at record highs and that seem to be starting to reach valuation limit.”