Data Shows Major Institutions Still Active in Bitcoin OTC Trading
On-chain data shows that large institutional investors are still active in the Bitcoin market through over-the-counter (OTC) trading.
As Bitcoin Funds Flow Ratio Decreases, Transferred Tokens Increase
As one analyst pointed out in a post on CryptoQuant, institutional investors still appear to be active in the BTC market behind the scenes.
“Transferred Tokens” is an indicator that measures the total number of coins that are exchanged on the Bitcoin network.
The “funds flow ratio” tells us how much of these tokens entered or exited the exchanges. Its value is calculated by simply dividing the total number of transactions involving exchanges by the total number of transferred tokens.
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Generally, large cash flow ratio values indicate that large institutional investors have recently been selling or buying.
However, since the middle of last year, the metric has dropped. The chart below shows the trend of the Bitcoin cash flow ratio, as well as the transferred tokens indicator.
It seems that the value of the ratio has observed a new downward trend recently | Source: CryptoQuant
As you can see from the chart above, Bitcoin’s cash flow ratio took a steep drop last year, but started to move sideways around October.
Recently, however, the metric has again shown some downward movement. This means that whales and institutional investors have not been using exchanges lately.
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While the ratio remained at these low values, the transferred tokens indicator saw many large spikes during the period. The indicator also appears to be taking an uptrend more recently.
Such high values would suggest that institutions are still present in the Bitcoin market; they just took their coins off the centralized exchanges.
Over-the-counter trading is a way of trading outside of exchanges. The new investment vehicles such as ETFs would also be responsible for part of the movement of the institutions.
At the time of writing this article, the price of Bitcoin hovers around $38,7,000, down 4% in the last seven days. Over the past month, the crypto has lost 18% in value
Below is a chart showing the price trend of the coin over the last five days.
The price of BTC seems to have continued its consolidation in recent days | Source: BTCUSD on TradingView
Bitcoin climbed back above $40,000 earlier today, but the crypto appears to have veered off the level once again.
The coin has already dipped below the $39,000 level, recovering the small rally it made in the past few days.
Featured Image from Unsplash.com, Charts from TradingView.com, CryptoQuant.com
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