What’s happening in the bitcoin market?

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Bitcoin has bounced back to $ 34,000 after yesterday’s pullback below $ 28,000 and is trading 10% above year-to-date levels. Nevertheless, the current quarter promises to be its worst since the start of the bear market in 2018, according to the data of the analytical platform. Skew.

The decline in the cryptocurrency rate since the beginning of the quarter at the time of data collection was 46%. This is the largest negative reading since the first quarter of 2018, when the three-month decline in the accelerated pullback from $ 20,000 approached 50%. Since the beginning of 2019, the second quarter of 2021 may become the fourth in a row with a negative result. In three other cases, the decline ranged from 10.6% to 21.5%.

Bitcoin Performance by Quarter Image: Skew


“Now many retail investors, people who have bought on their way to highs in the middle of the range above $ 50,000, even maybe at the beginning of the range above $ 60,000, are in great despair because their assets have, in fact, been cut in half. … They give free rein to fear and sell, ”said Eqonex Sales Director Justin D’anetan.


Institutional investors continued to withdraw assets from bitcoin-based funds last week, according to a report from CoinShares. This happens for the sixth week in a row. In the latter case, the outflow amounted to $ 89 million.According to the aggregate of all cryptocurrency funds, the outflow is observed for the third week in a row and last week reached $ 79 million.At the same time, funds based on several assets showed a positive result and attracted $ 10 million.

Dynamics of inflow / outflow of assets in cryptocurrency funds by week Image: CoinShares


“Prices were already pretty tight at the bottom of the $ 30,000 range,” D’anetan added. – And then the growing fears not only about the persecution of miners in China, but also regarding the prospects of the cryptocurrency space in general suppressed the enthusiasm of retail investors and dragged us down to $ 28,000. But then an interesting moment came: prices rebounded, and very quickly. I believe that most of the buying activity that triggered the $ 34,000 rally came from institutional players who missed the previous rally and are only joining now. Later, they can publish statements in which they will tell you what they really bought at that time. ”


It is not known which institutions could have invested in bitcoin on the spot market during yesterday’s decline, but ARK Investment Management Katie Wood’s fund in the last session did disclose the purchase of more than a million shares of the Grayscale bitcoin trust (GBTC) and 215,000 shares of the Coinbase exchange.

Analyst firm Glassnode, meanwhile, notes that the volume of bitcoins on OTC platforms has dropped to its lowest level since March 2020, despite the fact that miners increased asset allocation in June amid problems in China and the largest migration of computing power in the history of the industry.

OTC Bitcoin Wallet Balance Image: Glassnode


“Current market behavior can scare off new retail traders, that is, those people who are able to succumb to the temptation to invest in meme coins and other similar hyip tokens,” – said the head of research at AAX Exchange Ben Caselin.


At the same time, Glassnode draws attention to the fact that the volume of bitcoins in the wallets of long-term holders has grown significantly since the start of the rate rollback in mid-April and continues to follow the set trend.


“The inflows of bitcoins to exchanges have almost tripled in two months. This suggests that alarmists are selling in the spot market. Now I would like to see how these inflows begin to decline, ”writes analyst Alex Kruger.


Bitcoin inflows to exchange wallets Image: CryptoQuant

It is also noteworthy that the Bitfinex exchange over the past weeks has seen a sharp increase in the volume of short positions, which were closed even before yesterday’s collapse. As noted by Cointelegraph, on June 6, their volume increased from 1,380 to 6,700 with an average price of $ 36,150 per bitcoin. Three days later, another 12,180 contracts were added while Bitcoin was trading around $ 37,050. By June 15, the value rose to 25,000, with the last positions added at a rate of around $ 40,100. By the time Bitcoin fell below $ 33,500, 17,000 contracts had already been closed. Thus, their holders could not or did not want to predict a further decline in the market, being satisfied with the available profits.

Bitfinex Short Position Volume Change Image: TradingView


“Long-term forecasts are more fundamental, but also more difficult to build, – said D’anetan. – I am still extremely bullish on the long-term outlook for cryptocurrencies, even before the end of this year, which is only six months away. I think we can easily face another stage of growth. ”


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