Investors Are Strongly HODling Bitcoin While More Are Interested In Buying BTC
- Volume rising but volatility down which could be due to increasing derivatives market
- Google search interest for the term “buy bitcoin” is back on the rise after an organic period of growth
- Meanwhile, no significant spike in the count of transfers to the exchange addresses
- Retail investors are more bullish than the institutional investors
Bitcoin price has taken a breather as it hovers around $9,800 while the volume remains strong above $1 billion on top ten exchanges with real volume. The 7-day average real trading volume keeps on rising, now closing to a daily level of $800 million.
Volatility meanwhile is still down. Despite the prices rising last week, we haven’t seen a large spike in volatility since late October. In comparison to the beginning of 2019, the bull run of 2020 didn't see the same extreme daily returns either.
The low volatility could be related to the increasing derivatives market for the digital asset, which is keeping the price action more stable.
More investors looking into buying bitcoin?
The price in 2020 which is up 34% in 2020 so far might be attracting new investors into the bitcoin space as the Google search interest for the term “buy bitcoin” is back on the rise. In the past year, the interest has been only higher once during the 2019 bull run in June when the price went to $13,900.
According to Arcane Research, unlike the peaks of 2Q19 that came during volatile periods, “this search spike comes after an organic period of growth following a strong start of the year.”
The price action prior to the search spike this time has also been far less explosive in the short term which might indicate “fresh interest into buying bitcoin is less affiliated with ‘FOMO.’”
Another explanation for this uptick could be bitcoin breaching the psychological $10,000 resistance.
Are investors not ready to sell their bitcoin?
While ‘buy bitcoin’ is gaining traction, selling BTC isn't. As per the data provided by Glassnode, there is no significant spike in the count of transfers to the cryptocurrency exchange addresses.
During the past bull runs, the exchange deposit increased as investors turned to sell. But this time exchange deposits have been relatively flat ever since bitcoin first started moving at the beginning of January.
“This may indicate that people are not ready to sell their bitcoin and that a price top can still be far away,” noted Arcane.
However, this metric has its flaws in the manner that it only measures the count of transfer and not the total amount of bitcoin and that exchanges have acquired more BTC over the last years.
Retail more bullish than institutional investors
Bitcoin futures also tell us that this interest in bitcoin could be from retail investors which are more bullish than their institutional counterparts.
The bitcoin futures premium rate on retail exchanges is now ahead of CME, after a week of keeping it equivalent. The premium rate is now close to 6% on average for June contracts. March contracts while down to 2.5% on CME has risen to 3.4% on other exchanges.
This is also from the retail side as annualized premium rates for March have climbed up 28%, almost 3x the average premium rate over the last three months.