Bitcoin’s plunge last week has come under scrutiny. It is believed that several factors influenced its depreciation – from sluggish market sentiment to transactions with excessive leverage. There are other arguments related to the decrease in the activity of institutions.
The organizations announced their presence by the end of 2020. The most aggressive accumulation was observed in Grayscale, the bulk purchases of MicroStrategy should also be noted.
From October 1, 2020 to the third week of February 2021, Grayscale’s BTC reserves increased from 449.8 thousand BTC to 655.47 thousand. Investments then stopped abruptly, and a significant weekly correction of 21% began.
Many analysts speculated that Grayscale had stopped increasing its BTC holdings as the GBTC premium was showing negative rates. Since February 25, the GBTC premium has not reached a positive value, moreover, on May 14, a historic low of 21.23% was set.
This suggests that the institutional demand in the market has dropped significantly.
During this period, the price dynamics of bitcoin was also low: on February 21, bitcoin registered a maximum of $ 57,780, after which the momentum noticeably decreased.
Thus, it can be assumed that after the first quarter of 2021, the decrease in institutional spending could have stopped the BTC rally. Retail traders were unable to generate significant momentum for the rally as leveraged deals drove the price down.
One of the positives that characterizes the current market is the fact that Grayscale may again start accumulating coins at previous prices, which was observed in early February.
Another conclusion that can be drawn is that institutionalists wait for the price to fall even lower, only after that they will place a large buy order.
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