- The proportion of Bitcoin supply held by long-term holders continues to rise as more BTC is held dormant.
- BTC accumulation is on, and the market has seen one of the most significant outflows from cryptocurrency exchanges.
- JPMorgan Chase is pitching its private bank clients an in-house Bitcoin fund.
Previous bull markets were triggered when the Bitcoin supply held by long-term investors increased consecutively for months. BTC has built a base around $30,000, and the benchmark crypto is back on track for hitting $100,000 in 2021.
Exchange outflows indicate a bullish future trajectory for Bitcoin
$131 billion worth of Bitcoin moved recently; however, exchange deposits and withdrawals accounted for only 1% of the transferred BTC. Therefore, it is likely that an increase in over-the-counter (OTC) trades by institutional investors is responsible for the BTC transfers. OTC desks allow large investors and institutions to make direct trades without restrictions imposed by exchanges.
OTC deals do not impact short-term price movements since the trades do not go through exchanges. A surge in BTC transfers indicates rising institutional interest in Bitcoin, and from the macro outlook, it is bullish for the top crypto’s price.
The news of mega-bank JPMorgan launching its own in-house Bitcoin fund fuels the narrative of rising institutional demand for BTC. The multinational investment bank has partnered with New York Digital Investment Group (NYDIG) and started pitching private bank clients on a passive Bitcoin fund.
JPMorgan’s passively managed BTC fund does not have any investors yet, which may be set to change soon. The investment banking company has declined to comment.
Institutional investors’ bullish outlook is shared by long-term BTC holders, and increased exchange outflows signal accumulation.
One of the largest BTC outflows from exchanges was noted recently. Since long-term holders (LTH) are not known to hold their Bitcoin on exchanges, analysts assume that LTHs are accumulating BTC reserves.
Michaël van de Poppe, a full-time Bitcoin trader and analyst, recently tweeted
The market has seen one of the largest outflows from exchanges for #Bitcoin recently.
Long-term holders don’t hold their #Bitcoin on exchanges -> not your keys, not your coins.
Given this data, you can assume that those have been accumulating recently and are filled. pic.twitter.com/PCvaumtypR
— Michaël van de Poppe (@CryptoMichNL) August 4, 2021
A dramatic increase in BTC exchange outflows is bullish for Bitcoin price in the short term. Bitcoin has built a base at $30,000, akin to $4,000 in the beginning of 2019. There are several parallels in metrics (like exchange flows) between the ongoing price rally and the one observed in 2020.
BTC price action is on track to climb toward $100,000 in 2021 based on the massive BTC outflows.
Disclaimer: FXStreet has reached out to JPMorgan Chase to get an official statement about the recent developments, but it has yet to hear back.