The price of Bitcoin (quotation BTC) is constantly in the crosshairs of almost every trader in the digital currency ecosystem. The digital asset with the largest market capitalization also gets the most attention from large buyers or institutional investors.
According to a CoinTelegraph report, Matrixport's head of research and strategy, Markus Thielen, confirmed that most of the buying momentum that is driving the price of Bitcoin higher is fueled by the mass of institutional investors pumping in money. in the field.
The claims are not unsubstantiated, as companies such as MicroStrategy Incorporated, Block Inc, and Paypal Holdings Inc have invested heavily in cryptocurrencies. While institutional investors betting on Bitcoin aren't limited to publicly traded ones, many of those investing in the nascent asset class are largely unknown because they don't make their records public.
According to CoinTelegraph's report, data from Matrixport shows that if an asset that trades around the clock performs well during US trading hours, institutional investors are fueling that growth. On the other hand, if an asset that trades around the clock performs better during Asian trading hours, then it is fueled by the buying activity of Asian retail investors.
While US institutions have the cash to move the market, Asian retail investors have the number to cause change, but there is a major skew in Bitcoin's performance that shows it is driven by US corporate buyers.
While Matrixport's research provided good insight, the fact that current Bitcoin holders, such as Tesla, have chosen not to sell its remaining BTC has injected some price stability into the market as a whole. .
The price of Bitcoin and the buying by institutional investors, a positive or negative trend?
While all those who invest in Bitcoin or any risky asset seek to profit from their holdings through price growth, institutional investors use their shareholders' money to finance the purchase of the asset, a situation which makes their very deep and unexpected dumping season.
Bitcoin's price stability is better driven when small HODLers sell than a huge selloff from institutional investors, who usually have a larger unit in their custody. Corporate investors are prone to sell off their assets, as Tesla did with more than 75% of its holdings in Bitcoin when it looked like it would fall short of its financial aspirations in 2022.
Corporate buyers typically use Bitcoin as a safety net to cushion the effect of the likely collapse of the broader financial ecosystem. This makes continued accumulation a risky trend for individual buyers who may not have a time-tested strategy for hedging their bets lest they get caught in erratic selling pressures from corporate investors.
