Institutional investor digital asset management company NYDIG announced interest in buying bitcoin following a decline on Sunday.
“Our platform has been exclusively on the side of buyers for the past 24-48 hours,” NYDIG research head Greg Cipolaro wrote in today’s newsletter.
Bitcoin price climbed to new highs of around $ 65,000 over the past week before plummeting to $ 51,000. At the time of publication, bitcoin is quoted at around $ 56,000, up 90% YTD. The growth is associated with the interest of institutional investors, due to the desire to hedge inflation in national currencies.
“During these times of risk aversion, institutional investors have a buy-on-pull mentality that suggests they are increasingly receptive to bitcoin volatility,” writes Cipolaro. “We believe the root cause of the sale is investor positioning, not fundamental news. In other words, traders used large amounts of leverage in long positions, which resulted in forced liquidations. ”
He also noted a significant excess of the price of bitcoin on the Coinbase exchange over the levels of Binance:
“The difference in the spot market, which is usually very small, reached 3% at some point. We believe this data points to the source of seller pressure in Asia, not North America. ”
At the same time, Bloomberg senior strategist Mike McGlone warns of the presence of a deflationary movement negatively affecting commodity prices, including bitcoin as a hedge against inflation.
“The fact that the world’s most significant commodity, crude oil, is trading at the same level as 16 years ago, despite unprecedented monetary stimulus measures, speaks to the entrenchment of deflationary forces,” writes McGlone.
Since the financial crisis, commodity prices have dropped 60% against US M2 money supply, while the S&P 500 has outperformed it by 40%, Bloomberg said in a report.
“The tide in the stock market must continue or deflation will prevail,” McGlone said. “If WTI does not hold above $ 70 a barrel, little will be able to stem the same deflationary forces that marked the peak of 10-year US government bond yields of about 3% in 2014.”
Data from a new report from CoinShares showed that over the past week, the inflow of assets into investment products based on cryptocurrencies amounted to $ 233 million, exceeding the values of the previous week by almost three times.
“This week’s inflows have been unusually distributed among digital assets,” the firm writes, noting that Bitcoin raised $ 108 million and Ether raised $ 65 million, an impressive amount relative to the capitalization of the two cryptocurrencies. – XRP was among the most in demand and raised $ 33 million, which led to an almost double growth of assets in products based on it to $ 83 million. Investment products based on digital assets showed significantly higher turnover this week. It corresponds to a 59% rise over the previous week and early February levels. ”
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