Institutionals are driving the BTC stock market balance into the red

Bitcoin resumes the flirtation with the 40,000 mark and positions itself for another ATH attempt. Star investor Bill Miller meanwhile lets money follow his words.

While Bitcoin left the Altcoins with more and more market shares in the past three weeks of trading, the largest crypto currency has reported loudly back with the recapture of the 40,000 US dollar mark on the weekend at the latest. At the beginning of the week, the key crypto currency slipped just below the symbol mark and was quoted at USD 39,473 with a weekly plus of 18.7 percent.

Even if the crypto reserve currency was unable to maintain the level for the time being, the recent sharp rise in market capitalization indicates that the all-time high will soon be rendezvous. Since January 27, the total value of all Bitcoin in circulation has risen from 550 to currently 728 billion US dollars. The foundation for the next phase of the rally seems to have been laid in the form of massive capital inflows.

While the slump at the end of January was still marked by profit-taking, the rapid recovery points to further acquisitions, primarily by wealthy investors. Hedge funds in particular are pumping the market full of liquidity with their massive BTC allocation. Investment companies like Ruffer, which made a profit of 750 million US dollars on a BTC investment in just two months, agree with the immense capital inflows from institutional investors.

With Bill Miller, the next star investor is entering the emerging asset class. Miller Value Fonds’ Miller Opportunity Trust announced on February 5 in a filing to the SEC that it would invest 15 percent of its capital in Bitcoin. The funds are to flow into the GBTC Trust managed by Grayscale. With a total of over $ 2.25 billion in assets under management, the expenditures totaled over $ 300 million. This would increase the GBTC to the 14 billion US dollar mark.

The move comes as no surprise. It was only on January 21st that Bill Miller reinforced his belief in Bitcoin’s performance in an investor letter:

“Bitcoin has been the best performing asset for eight of the last ten calendar years, and its annualized performance has blown away the next best performer, the Nasdaq, by a factor of ten over the past ten years.

Bitcoin shortage

The trend towards broad market entry by institutional investors is reflected in the growth in well-filled wallets. As the following graphic from the on-chain data portal Glassnode shows, the number of wallets holding 1,000 or more and thus at least 39 million US dollars in BTC at the current exchange rate has increased exponentially since December 2020. Almost 2,500 wallets are already in circulation, although there is no sign of an end to the trend.

The immense reallocation of assets has the consequence that the BTC reserves at the trading venues are gradually becoming scarce. In just one year, Bitcoin stocks on the exchanges have decreased from around 3 million to currently 2.34 million Bitcoin – a drop of 21 percent.

As a result, the aggressive purchasing policy is driving the BTC balance on the stock exchanges further and further into the red. The difference between the volume that flows into the exchanges and flows out of the exchanges has been growing ever larger since 2020. The shortage is taking on more and more drastic features and has an ever greater impact on the price development. Also to the delight of small investors, whose BTC investments grow with the influx of professional investors.

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