New Bitcoiners Busy Selling While ‘Big-Money Bets’ Keep Flowing into Cryptos
Bullish continuation is the “most likely outcome” for BTC price amidst “strong” institutional interest, but only if we do not close a daily candle below the recent $43,000 lows.
This week has been a good one for the cryptocurrency market as the price of Bitcoin made its way from about $50k to about $56,500 level.
Currently trading around $55,500, Bitcoin is up 22.25% in March so far, a month that hasn't been historically a green one for the leading digital currency. For now, we are just about 5% away from our ATH.
More and more capital is also flowing into the derivatives markets, as the amount of outstanding Bitcoin futures contracts (open interest) across major exchanges reaches another ATH, $20 billion.
Interestingly, at current price levels, it is the one year plus and two year plus HODLers selling their Bitcoin. Those who have been HODLing BTC for over three years and have experienced a bull market before are busy stacking sats.
According to trading platform HXRO Labs, BTC has confirmed bullish market structure on the daily, and “If we’re to consolidate more in this range, we could move down from here to test a higher low.”
As BTC/USD trades in the $40k to $50k range, bullish continuation is the “most likely outcome,” that is, as long as the price doesn’t close a daily candle below the recent $43,000 lows. If that happens, it would confirm a bearish reversal on the weekly and be a cause for mid-term concern.
Bitcoin dominance is also retesting local lows this week after a clean bearish retest, and a breakdown from the lows would mean an accelerated move in alt/BTC pairs this month and into Q2.
Continued Demand & Correlation with S&P 500
While S&P 500 managed to rise 2.30% this month, also nearing its peak, the same can’t be said of tech-heavy Nasdaq, which, though it saw an uptick of 1,000 pts this week is still down 7.3% from its ATH.
This risk-on sentiment has gold still in the losses by 0.54% in March, so far, and -8.92% YTD. The USD index, meanwhile, did manage to record 0.84% gains this month.
“We feel that it is more of a ‘risk-on/risk-off play,” wrote Matt Maley, chief market strategist at Miller Tabak + Co., while noting that even during the recent Nasdaq correction, Bitcoin held up “quite well” which could “have been due to the fact that the S&P 500 had also held-up quite well.”
Bitcoin is holding on to its gains in part due to the continued interest from institutions. After Tesla and the ARK Innovation ETF, JPMorgan, Morgan Stanley, Goldman Sachs, insurance firms, high net-worth individuals, and pension funds have also joined in on the cryptocurrency train.
As we reported, Bitcoin-related financial services provider NYDIG, the subsidiary of stone Ridge Capital, raised $200 million from New York Life, MassMutual, Soros Fund Management, and many other big names.
NYDIG also revealed that Bitcoin adoption among institutions is gaining pace, as evident from the fact that the insurers have over $1 billion in BTC exposure on their platform.
“Bitcoin and Ethereum bullishness are back as more big-money bets keep flowing into cryptocurrencies,” said Edward Moya, senior market analyst at Oanda. “Institutional interest still seems strong.”
This week's uptrend also came on the back of the US passing the $1.9 trillion stimulus bill, MicroStrategy and Chinese beauty app Meitu buying Bitcoin, and Norwegian energy giant Aker putting Bitcoin in Treasury reserves.
“We have seen an increase in interest levels from institutional players globally,” said Annabelle Huang of crypto financial-services firm Amber Group. “In China, a lot of high net worth individuals have been inquiring on how to add Bitcoin to their portfolio.”
But the weakness we have seen time and again since last month has been Bitcoin reacting to S&P 500. The relationship between Bitcoin prices and the tech market has also been very close.”
Technical analysis, meanwhile, is supportive of higher prices, as per a report by Evercore ISI strategist Rich Ross, who said Bitcoin could reach $75,000.