On-chain data shows that major institutional investors are still active in the Bitcoin market through over-the-counter (OTC) trading.
As Bitcoin Fund Flow Ratio Drops, Tokens Transferred Go Up
As one analyst noted in a CryptoQuant post, behind the scenes institutional investors still seem active in the BTC market.
The “tokens transferred” is an indicator that measures the total number of coins traded on the Bitcoin network.
“Fund Flow Ratio” tells us what proportion of these tokens being moved are going into or out of exchanges. Its value is calculated by simply dividing the total transactions with exchanges by the total number of tokens transferred.
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Typically, large fund flow ratio values indicate that large institutional investors have recently sold or bought.
However, since the middle of last year there has been a decline. The chart below shows the trend in the Bitcoin fund flow ratio, as well as the token transferred indicator.
It seems that the value of the ratio has recently seen a further downward trend | Source: CryptoQuant
As you can see from the chart above, the Bitcoin fund flow ratio saw a sharp decline last year, but it started moving sideways around October.
Lately, however, the stat has been showing some downward movement again. This means that whales and institutional investors have not taken advantage of exchanges lately.
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While the ratio has remained at these low values, the token transferred indicator has seen quite a few large spikes during the period. The indicator also seems to be on an uptrend lately.
Such high readings suggest that institutions still have a presence in the Bitcoin market; they just moved their coins outside of centralized exchanges.
Over-the-counter deals are a way to trade external exchanges. Newer investment vehicles such as ETFs are also said to be responsible for some of the movement of institutions.
At the time of writing, Bitcoin price is hovering around $38.7k, down 4% over the past seven days. In the past month, the crypto has lost 18% in value
Below is a chart showing the trend in the price of the coin over the past five days.
The price of BTC seems to have continued to consolidate in recent days | Source: BTCUSD on TradingView
Bitcoin once again rose above $40k earlier today, but the crypto appears to have bounced off the level again.
The coin has already fallen below the $39k level, renewing the minor recovery seen in recent days.
Featured image from Unsplash.com, Charts from TradingView.com, CryptoQuant.com