Are Institutions Above The Bitcoin Digital Gold Narrative?

Bitcoin is trading at $ 36,786 and posting gains on the 7-day chart, after two consecutive weeks of losses. On the 30-day chart, BTC still has a loss of 32.3%. Price action is moving painfully higher in the current range, but without the conviction of the bulls.

BTC is trending lower on the daily chart. Fountain: BTCUSD Tradingview

The cryptocurrency market appears to be stagnant after the BTC price crash. The battle has been fought by short-term holders selling their coins to long-term holders, but institutions have been mostly absent during the correction.

Data from CryptoQuant suggest that institutional demand for Grayscale Bitcoin Trust (GBTC) and the launch of the Bitcoin Fund in Canada by mutual fund manager 3iQ is declining.

As seen below, the GBTC has seen a negative premium and has been trading at a discount since March 2021. This caused discomfort and concern on the part of its clients and Grayscale’s parent company, Digital Currency Group, was forced to intervene. . The company had to buy several million shares of GBTC.

Bitcoin BTC BTCUSD
Source: CryptoQuant

Unlike the Canadian QBTC, the GBTC has kept its Bitcoin. The QBTC reduced its holdings to 7,980 BTC in early June. Thus, selling pressure is created in the crypto market, as seen below.

Bitcoin BTC BTCUSD
Source: CryptoQuant

General sentiment in the market has been negative, despite news of adoption by nation-states. At the beginning of the current week, the price of BTC experienced a positive development. This coincides with a decrease in the GBTC discount from 12% to 7%.

BTC BTCUSD
Source: Glassnode

As Lex Moskovski, CIO of Moskvski Capital, showed in the last 2 days, the number of addresses that accumulate BTC saw an increase after a period of consolidation. However, the selling pressure has not abated, as suggested by the increase in BTC inflows to exchanges.

Bitcoin BTC BTCUSD
Source: Glassnode via Lex Moskovski

Will Bitcoin Bulls manage to roll back the bears?

At the moment, the price of Bitcoin could still be dominated by uncertainty and without a clear direction. As a report from QCP Capital indicates, the BTC sell-off has been “deeper and sharper” than expected.

BTC BTCUSD
Source: QCP Capital

The liquidation has occurred in 3 waves since the beginning of May. The market could see another sell-off, but in the form of consolidation, as the company claims:

It appears that BTC is setting a bottom for the higher Wave 4 rally. However, this Wave 4 will likely be a slow and steady consolidation routine.

Bitcoin has two short-term challenges, it must change $ 38,000 from resistance to support and it must overcome the “formidable” wall of $ 40,000. The thesis of Bitcoin as a store of value seems to be invalidated in the short term, as suggested by low institutional participation. Hence, there is less demand for cryptocurrencies.

(…) The three bullish cases for BTC have been invalidated, and it is difficult to make a bullish fundamental argument to buy BTC at this time. We continue to expect the downtrend to persist and the market to be in sell rally mode at least in the short term, and if Wave 4 extends beyond $ 40k, we expect the $ 50k to have an even higher sell offer. .

QCP Capital expects the printing of the Consumer Price Index (CPI) and the Federal Open Market Committee (FOMC) meeting to be risk factors for the price of BTC in the near term.

It was the IPC impression last month, along with a confluence of a few other factors, that started BTC’s big uncoupling.

The company sees the possibility of the price falling below $ 30,000 and expects $ 20,000 to be strong support if this scenario materializes.

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