Over the past several weeks, Bitcoin has gone ballistic!
The crypto-asset has been soaring like never before. At the time of writing, Bitcoin just blasted past $34,500. This has triggered a sentiment of high accumulation, especially among the Coinbase Pro users.
The buyer activity on the cryptocurrency exchange saw a massive uptick as Bitcoin crossed $32K for the first time ever. According to the on-chain data on Crypto Quant’s chart, wealthy investors continued to pursue the world’s premier cryptocurrency as it established a new peak almost every day.
Coinbase Pro recorded an outflow of more than 35k Bitcoins which was worth well above $1 billion. It is important to note that Coinbase Pro is a US-based institution-focused cryptocurrency exchange. The demand grew from larger investors and corporations in the region who were attracted by its perceived inflation-hedging qualities and potential for quick gains. Hence, Bitcoin extending its record-smashing rally, further led the institutional investors to ride on a fresh FOMO-fuelled bull run thus driving the accumulation trend.
Large outflows from Coinbase Pro, such as this one, generally end up in the platform’s cold wallets for the purpose of custody. This is directly integrated with the platform’s over-the-counter [OTC] desk from where the big investors such as institutions normally transact over-the-counter to steer clear of affecting the price of the spot market.
Reacting to the charts, Ki-Young Ju, the CEO of Crypto Quant tweeted,
“Another insane Coinbase outflow. 35k BTC. Institutions FOMO buying”
Investments of this magnitude essentially signaled strong confidence among the market participants that the crypto-asset was being considered as a good hedge against potential inflation while offering a solid price appreciation over time.
The Compelling Case of Bitcoin
Looking carefully at the trend, it can be safely said that the latest bullish sentiment will eventually propel a broader market-wide rally. The meteoric rise was first triggered by COVID-19, however, several other factors have played important roles. For one, inflation and the lowering of purchasing power in the middle of huge stimulus spending led people to store-of-value assets, including Bitcoin.
It was not just the retail investors that have expressed confidence over the cryptocurrency, The rising concerns over potential inflation in response to an increase in US Dollar printing by the Feds; high net investors, both public and private were accumulating Bitcoin instead of cash primarily because of its distinctive characteristics that it has a verifiable scarcity, unlike fiat.