Coinbase, the largest exchange in the United States, has hosted several major Bitcoin buy-ins this year.
Recent reports show that sudden transfers of more than 10,000 BTC into private wallets are not uncommon. However, they prefer long-term storage of Bitcoin rather than keeping it near a point of sale.
Since private investors are confronted with liquidity bottlenecks due to the high institutional participation, Bitcoin has regularly flowed out of Coinbase in the last few months. This is clear as Bitcoin has outperformed every other institutional asset class in recent years, with a return of over 100% in the first quarter of 2021.
However, during the first quarter, the percentage of Bitcoin supply from whale addresses with over 100,000 Bitcoin increased 200 percent (or triple). According to Santiment, an on-chain data provider:
“The percentage of #BitcoinOffering whale addresses with 100,000 or more $ BTC is up from 0.76% 11 weeks ago to 2.20% today, an 11-month high. Meanwhile, the smaller one is 1k-100k $ BTC The addresses have dropped from 42.4% to 39.5% in the same 11 weeks. “
For analyst Lex Moskovski, the type of investor behind such transactions remains uncertain – it can be a private individual or a small group, as well as an institutional investor or a corporate client.
Related article | Bitcoin whales on defense, this is how BTC could hit new highs
“Institutions or not, that’s still a significant drain,” he commented on the Glassnode data.
The data is in line with the on-chain indicators, which remain optimistic. This week, the co-founder of Glassnode, Rafael Schultze-Kraft, pointed to an increase in the so-called Realized Limit (Rcap) of Bitcoin, which underpinned the general buy thesis.
The realized limit is a calculation of Bitcoin’s market capitalization based on the last price of each coin. It provides valuable information on market composition and trader sentiment, as well as a total that is very different from traditional market cap.
Schultze-Kraft tweeted on Friday:
“Unprecedented capital inflows into Bitcoin, measured by realized capitalization. In the past 6 months, the realized cap has increased by a whopping $ 250 billion – an increase of ~ 200%. Healthy bull market. “
1 / Unprecedented capital inflows in #Bitcoin, measured by realized capitalization.
In the past 6 months, the realized cap has increased by a whopping $ 250 billion – an increase of ~ 200%.
Healthy bull market.
Diagram: https://t.co/c7T5zQzmjc pic.twitter.com/zIdUC2w1nK
– Rafael Schultze-Kraft (@ n3ocortex), May 6, 2021
He went on to say that as of December 2020, the realized limit increased by the same amount as Bitcoin’s total conventional market capitalization.
The Rcap can still rise dramatically compared to the conventional cap until the end of the bull market is signaled. The MVRV, which calculates the ratio of the two metrics, was 4.4 this week, down from 7.6 in February and more than 10 on previous market cycle peaks.
“We haven’t had any real experience with institutions. It’s coming, ”replied Timothy Kim to the Glassnode numbers.
Grayscale, the world’s largest Bitcoin fund manager, has also expressed an interest in converting the Grayscale Bitcoin Trust (GBTC) into a Bitcoin ETF. After the hype surrounding the first US Bitcoin ETF, shares in the Grayscale Bitcoin Trust (GBTC) traded at a discount last month.
Related article | How Grayscale Bitcoin Trust could change everything for BTC at a discount
Featured image from Pixabay, Charts from TradingView.com, Bybit.com, and Glassnode.