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Bitcoin Has Stumbled, Has ‘Institutional Exhaustion’ Kicked In? – Cryptovibes.com – Daily Cryptocurrency and FX News

Bitcoin Has Stumbled, Has ‘Institutional Exhaustion’ Kicked In?


The Coinbase premium has come back again. But why is the Bitcoin (BTC) price still struggling to remain above $32,000? In the last two days, BTC has recovered slightly after plunging to as low as $28,850. After a steep rebound, nonetheless, bitcoin has been unable to break above the heavy resistance at $33,000 on January 23. It is still hovering around $32,000 at the time of publishing.

BTC/USD 1-hour price chart (Coinbase). Source: TradingView.com

Previously, when the bitcoin price started to plunge below $32,000, bitcoin traded much lower on Coinbase than on Binance. The lack of premium on Coinbase was worrying for various reasons. First, Bitcoin naturally trades higher on Coinbase exchange due to the minor premium of Tether.

Also, when Coinbase experiences a lower price than other crypto exchanges, it indicates that there is massive selling pressure in the United States market. As the selling pressure on bitcoin started to surge in the US space, the bitcoin price dropped sharply in a short time.

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BTC/USD (white) vs. Coinbase premium Index (blue). Source: CryptoQuant

Nonetheless, almost instantly after bitcoin rebounded from $30,000, the Coinbase premium came up. Today, bitcoin is almost $40 higher on Coinbase than on Binance. The re-emergence of Coinbase premium after around 12 hours is a positive sign of a possible trend reversal.

Signs of “institutional exhaustion”

But at the moment not many are bullish in the short term. Asia-based QCP Capital analysts see many signs of ‘institutional exhaustion.’ Since the main narrative around the recent surge has been the institutional demand for BTC coming from the US, the latest rally might be compromised if the institutional appetite for bitcoin slows down. They stated:

“Signs of institutional exhaustion: We’ve done a timezone analysis which breaks down BTC moves into Asia hours vs. US hours (12 hours each). Since March last year, the clear pattern has been relentless US buying while Asian whales and miners have been on the offer.”

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Bitcoin loses strength in U.S. period. Source: QCP Capital

The traders insisted that the massive strength in the United States trading session lost momentum for the first time since the rally started. In the past week, most of the bitcoin selling pressure originated from Asia. This marks a critical shift in the market sentiment. They explained:

“However after the BTC top 2 weeks ago, the strength in US hours has lost momentum for the first time. This is a clear sign of exhaustion in demand from the US institutions and corporates who have been the primary drivers of this bull run.”

What Happens Next?

Bitcoin seems to be at risk of a corrective phase all through the first quarter of this year in the case that institutional demand for bitcoin falls.

Multiple institutional-focused platforms and vehicles like Grayscale are still recording massive inflows. That shows that institutional demand is still massive. Concurrently, Microstrategy continues its policy of acquiring Bitcoin on every drop with the latest purchase happening on Friday totaling about $10 million.

The head of trading at Crosstower, Chad Steinglass, explained:

“Today, $31,000 was a pocket of strong support, so at least not everyone is selling. We’ll have to wait and see if that wall remains, or if institutions continue to accumulate. If they do, it’s likely that the trend will re-establish itself and continue. If they move to the sidelines waiting for more regulatory guidance, then their lack of buy flows will be acutely felt.”

Simultaneously, the possibility of a major correction persists if the United States market continues to see a general decline in the buying appetite to accumulate bitcoin, especially if the USD continues with its continuous recovery in 2021.





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