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Bitcoin’s massive price correction on Wednesday, which saw the crypto plunged to around $30,000, might have spooked some retail investors in panic selling. However, blockchain data suggest that institutions remain confident of BTC’s long-term prospects as large investors’ buying actually spiked during the dip.
Outflows from wallets linked to over-the-counter (OTC) desks actually spiked on Wednesday and Thursday, according to Coindesk. Since large investors usually make their crypto investments via OTC desk to avoid affecting prices on exchanges, OTC desk wallet outflows usually represent institutional investors' buying.
As Bitcoin’s price dropped from $43,000 to just above $30,000 on Wednesday, an outflow of 10,292 BTC OTC desk wallets was detected, the largest single-day outflow in three and a half months, according to data from Glassnode. The action was even hotter on Thursday as outflows rose to 11,056 BTC, the highest since December 31, 2020, bringing the total outflows to almost 35,000 BTC during the six-day period ending in May 20.
“Once again [there is] strong institutional demand,” Glassnode’s founders Jan Happel and Jann Allemann said in a tweet. “Whatever bitcoin lows we will see this summer, they won’t be for long. Might as well hodl through.”
Institutions investors have been buying the dip this year. This was observed during the price pullback right after Coinbase’s Nasdaq listing and during the correction last on February.
Business intelligence firm MicroStrategy also added more BTC to its treasury this week. The company announced that it purchased $10 million worth of the crypto increasing its stash to approximately 92,079 Bitcoins.
“On May 18, 2021, MicroStrategy Incorporated (the “Company”) announced that it had purchased approximately 229 bitcoins for $10.0 million in cash, at an average price of approximately $43,663 per bitcoin, inclusive of fees and expenses,” the company said on its SEC filing.
While institutional investors remain confident, it might take some time for Bitcoin to reach previous levels. “We believe that most of the leverage is out of the system now, and bitcoin should start to form a base here,” Delta Exchange CEO Pankaj Balani told CoinDesk. “However, the sharp fall – 40% between Sunday & Wednesday – has eroded confidence, and it will take some time for bitcoin to regain upward momentum.”
