As a seasoned researcher with a penchant for deciphering the intricacies of the cryptocurrency market, I find myself both intrigued and cautiously optimistic about Bitcoin’s current trajectory. The surge in ETF demand is undeniably driving this rally, pushing BTC ever closer to its all-time high. However, the significant increase in bitcoins available on OTC desks could potentially dampen these gains if ETF demand doesn’t continue to rise and OTC inflows decline as expected.
Bitcoin (BTC) has been surging, approaching its maximum historic price of $73,750 quite closely. On October 29th, it nearly broke that record by just a few hundred dollars. But since then, there’s been a slight adjustment, and now it’s trading at around $72,200.
As crypto fans eagerly await potential record-breaking prices soon, analysts at CryptoQuant discuss how the accessibility of Bitcoin through Over-The-Counter (OTC) transactions might influence its short-term price trend.
Bitcoin Rallies on ETF Demand
As an analyst, I’ve observed a significant factor driving Bitcoin’s recent surge – a substantial increase in net purchases originating from U.S.-based Spot Exchange-Traded Funds (ETFs). This finding is based on the latest CryptoQuant report I’ve been reviewing.
The amount of Bitcoin purchases has significantly risen since the beginning of the month, with daily volumes jumping from 1,300 BTC to 5,800 BTC as of October 29. On October 13, ETFs made their biggest single-day purchase of 7,700 BTC this month.
Although ETF interest is rising significantly, the daily Bitcoin purchases haven’t reached the heights seen in February and March, when investors bought as much as 16,000 BTC each day. CryptoQuant suggests that this lower daily buying could alleviate investor worries about Bitcoin not setting a new record high, given the growing demand from ETFs.
OTC Desks’ Balance to Remain Negative
As an analyst, I’m observing a significant shift in the Bitcoin market. Unlike Q1 2024 when the balance of Bitcoins on Over-the-Counter (OTC) desks was declining, currently, there’s a surge, with over 416,000 BTC available on these desks compared to the 183,000-193,000 BTC observed in Q1 2024. This suggests an increase in the availability of Bitcoins on OTC desks since the beginning of the year.
Because there is a large amount of Bitcoin available for over-the-counter (OTC) trading, daily purchases made through an Exchange Traded Fund (ETF) account for a smaller proportion of the total Bitcoin supply. At present, daily ETF purchases equate to between 1% and 2% of the Bitcoin held on OTC desks, whereas in the first quarter of the year, this figure was as high as 9% to 12%. Analysts predict that increased demand for ETFs is necessary to significantly lower the Bitcoin supply available for OTC trading.
On a positive note, the rate at which Bitcoin balances on Over-The-Counter (OTC) desks have been increasing has slowed down significantly from what was observed in Q2 and Q3, as a result of decreasing inflows. Contrastingly, the Bitcoin balance on these platforms is now growing by approximately 3,000 BTC per month, which is significantly lower than the 77,000 BTC and 92,000 BTC increases seen in June and August respectively.
If over-the-counter (OTC) trading desks have negative balances because they’re selling more Bitcoin than they’re buying, an increase in demand for Bitcoin ETFs is necessary. As long as these trading desks continue to experience reduced inflows of crypto assets, it will be challenging for Bitcoin to reach new record highs.
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2024-11-02 11:37