Bitcoin has the least possibility of crashing below $25,000 now that institutional involvement in the space is hitting a record high, says Ki-Young Ju.
The on-chain analyst, who serves as the chief executive of CryptoQuant, said in a tweet Tuesday that investors and traders would treat $26,000 as their sessional support — a level with a higher “BTFD” sentiment, which stands for ‘Buy the F***ing Dip.’ He took his cues from data that showed the lengths and breadths at which institutions have mousetrapped the Bitcoin market.
“16 percent of the BTC realized market cap is now owned by institutional investors,” claimed Mr. Ju after analyzing the total number of Bitcoin held by New York-based Grayscale Investments and in the mainstream companies’ reserves.
The total amount came out to be worth $49 billion. Bitcoin’s realized market capitalization is about $186 billion.
Psychological Support
The latest developments have pushed Bitcoin further into the category of mainstream financial assets.
Small traders now see big investors holding an ample amount of cryptocurrency wealth against inflation, ultralow bond yields, and a depreciating US dollar. Meanwhile, many of the so-called whale trades have occurred after Bitcoin closed above $20,000, suggesting that whales have speculated on higher prices in the future.
In a separate data published Monday, Mr. Ju noted that Bitcoin whales are reaching the state of sell-side exhaustion.
Bitcoin Exchange Whale Ratio. Source: CryptoQuant
“Fewer whales are depositing to exchanges,” the analyst explained. “I think this bull-run will continue as institutional investors keep buying and Exchange Whale Ratio keeps below 85 percent.”
Meanwhile, institutional involvement has further prompted retail traders to score new opportunities in the Bitcoin market. According to Adam Back, the co-founder/CEO of Blockstream, those small investors have pushed the BTC/USD exchange rate to its all-time high during the holiday season.
So $25k* on 25th, three new ATHs $24.7, $24.8 and $25k in a day. You think institutions did that? On Christmas day? Retail did it – only people near a keyboard.
(*$25k if you pick @bitstamp or @krakenfx tho not quite on @bitfinex) pic.twitter.com/6PmiEcdn7v
— Adam Back (@adam3us) December 26, 2020
New supports are also looking to emerge as more institutions commit to purchase $100 million worth of Bitcoin in the first quarter of 2021. Greenpro Capital, a Hong Kong-headquartered business intelligence firm, announced Monday that it would raise the said capital via debt sales to launch a Bitcoin Fund.
“I’ve instructed our investment bankers to raise debt in Q1, 2021 of up to US$100M to invest in $BTC,” confirmed CEO CK Lee, adding that Greenpro “will also invest its own cash into BTC.”
A Rosier Technical Setup for Bitcoin
The upside fundamentals are also leaving the Bitcoin price in a bullish technical bias.
An independent but pseudonymous market analyst spotted the cryptocurrency in a downside consolidation phase from its all-time high of $28,300. He stated that the phase appears like a Descending Triangle, a technical setup that puts Bitcoin en route to $29,300 on its next bullish breakout.
“Looks like a potential descending triangle to me here,” he added. “Targets may vary a bit depending on the exit point. Confirmation on a breakout and – preferably – retest.”
Bitcoin Descending Triangle scenario, as highlighted by CryptoHamster. Source: BTCUSD on TradingView.com
On the flip side, a negative breakout could lead the price towards $23,200, invalidating Mr. Ju’s $25,000-support call.
