Reversal Ahead? Institutions Are Buying The Bitcoin Dip In Droves
Bitcoin’s correction this month may be short-lived as institutions appear to have taken the drawdown as a juicy buying opportunity, according to on-chain data.
The findings arise alongside other blockchain-based signals suggesting that Bitcoin’s price is at an appetizing entry point.
Institutions Just Bought The Dip
As shared by market intelligence platform CryptoQuant on Thursday, “institutions” – loosely defined as Bitcoin wallets holding between 1000 BTC and 10,000 BTC – have been accumulating coins at their second-fasted rate this year since the start of July.
Last week, alone, these entities gathered 101,600 BTC to their blockchain addresses. Notably, this occurred during a period of low volume and inflows to U.S. Bitcoin ETF products, meaning such “institutional” accumulation isn’t coming from those funds.
“This means that, unlike what was seen in March, which was a demand more linked to fundraising, the current institutional accumulation may indicate a true process of “buying the dip” in large players,” wrote on-chain analyst Cauê Oliveira on the matter.
March was the only month in which institutions experienced slightly larger inflows to their wallets. Bitcoin reached its all-time high at $73,700 at the time, and Bitcoin ETFs were experiencing inflows in the order of $500 million per day. Based on public reporting data, roughly 80% of the inflows to the Bitcoin ETFs from January through March appeared to come from retail investors
Bitcoin’s price has cooled and consolidated since that time, and large holder balances climbed at a much slower pace throughout April and May, before ramping up in June and July.
Short-Term Holder Capitulation
Notably, short-term Bitcoin holders that have been holding their coins for between 1 and 3 months have capitulated over the past month – particularly last week when BTC plummeted below $54,000.
“Approximately $2.4 billion worth of Bitcoin aged between 3 and 6 months moved on the network during the drop,” noted Oliveira at the time. Bitcoin younger than six months is widely considered by analysts to be “short-term holder supply” that’s likely to change hands as novice traders experience first-time Bitcoin volatility.
According to another blockchain analyst – El Crypto Tavo – short-term holder capitulation is generally a good sign that investors should buy in.
“One of the best metrics for identifying optimal entry points in a bull market is when short-term Bitcoin holders sell at a loss and the fear index is ridiculously high (which has been happening in recent weeks),” he wrote on Thursday.
“In contrast, previous market peaks have been signaled by long-term holders taking significant profits over numerous months, which hasn’t happened yet,” he added.
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