Bitcoin (BTC) Price Rally Driven by Institutional Demand
The price of Bitcoin (BTC) has surged in recent weeks, reaching $53,000 before settling around $52,000. However, this rally may be primarily driven by institutional demand rather than retail participation. Crypto analyst Ali Martinez has observed a correlation between the rising BTC price and a decline in the creation of new Bitcoin addresses, indicating a decrease in retail activity.
This suggests that institutions are scooping up large supplies of Bitcoin, with major inflows to spot Bitcoin ETFs. Ali Martinez also reported that Bitcoin whales have accumulated 100,000 Bitcoins worth $5 billion.
Contrary to Expectations: ETF Inflows Improve Liquidity
Despite expectations of a supply shortage caused by increased demand from US spot Bitcoin ETFs, liquidity in the cryptocurrency market has actually improved since their introduction. Figures from market data indicate a surplus of tokens circulating within the market.
This contradicts claims by Bitcoin proponents like Michael Saylor and Cameron Winklevoss that the pent-up demand from newly launched funds is ten times the BTC production by miners. While there is plenty of liquidity, it is skewed towards the sell side significantly.
Furthermore, the recent court ruling allowing Genesis to liquidate their GBTC holdings could introduce additional selling pressure as companies redeem shares and settle debts. Selling activity from miners has also been increasing due to the upcoming Bitcoin halving.
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