On-chain data shows large institutional investors are still active in the Bitcoin market through over-the-counter (OTC) trading.
While Bitcoin Fund Flow Ratio Goes Down, Tokens Transferred Moves Up
As pointed out by an analyst in a CryptoQuant post, institutional investors still seem to be active in the BTC market behind the scenes.
The “tokens transferred” is an indicator that measures the total amount of coins being transacted on the Bitcoin network.
“Fund flow ratio” tells us what part of these tokens being moved are going into or out of exchanges. Its value is calculated by simply dividing the total transactions involving exchanges by the total tokens transferred.
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Usually, big values of the fund flow ratio indicate that large institutional investors have been selling or buying recently.
However, since the middle of last year, the metric has been observing a decline. The below chart shows the trend in the Bitcoin fund flow ratio, as well as the tokens transferred indicator.
It looks like the value of the ratio has observed further downtrend recently | Source: CryptoQuant
As you can see in the above graph, the Bitcoin fund flow ratio saw some heavy decline last year, but it started moving sideways around October.
Recently, however, the metric has again showed some downwards movement. This means that whales and institutional investors haven’t been using exchanges lately.
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While the ratio has remained at these low values, the tokens transferred indicator has rather observed many large spikes during the period. The indicator also looks to be catching an uptrend most recently as well.
Such large values would suggest that institutions are still present in the Bitcoin market; they have just been moving their coins outside centralized exchanges.
Over-the-counter deals is one way to trade outside exchanges. Newer investment vehicles like ETFs would also be responsible for some of the movement from institutions.
At the time of writing, Bitcoin’s price floats around $38.7k down 4% in the last seven days. Over the past month, the crypto has lost 18% in value
Below is a chart that shows the trend in the price of the coin over the last five days.
The price of BTC seems to have continued its consolidation in the last few days | Source: BTCUSD on TradingView
Bitcoin touched above $40k once again earlier today, but the crypto looks to have been once again rejected from the level.
The coin has now already dropped below the $39k level, retreading the small recovery it made over the last few days.
Featured image from Unsplash.com, charts from TradingView.com, CryptoQuant.com