Those planning to go short the ongoing bull run should think twice, according to on-chain analyst Kim-Young Ju.
The chief executive of CryptoQuant, a data analysis company, said in a tweet Thursday that traders have no reason to bet on Bitcoin’s potential fall. He explained that, despite the cryptocurrency’s short-term downward correction from its all-time high of $ 24,300, institutional investors are buying it at local lows.
Mr. Ju emphasized that with a so-called “Coinbase Pro Outflow” indicator. The statistic measures the amount of Bitcoin transferred from the wallets of the US exchange. He noted two cases where the outflow rate increased dramatically. At the time, the cost of buying one Bitcoin was well above $ 23,000. Mr. Ju said:
“The most important factor now is institutional investors. Huge [over-the-counter] deals are still running according to on-chain statistics, and Coinbase’s outflows reached 24k BTC yesterday.”
Bitcoin's Outflow from Coinbase Pro trading platform. Source: CryptoQuant
Simply put, the entry of institutional capital into the Bitcoin market, mainly because the cryptocurrency is trading above USD 23,000, increases the level’s potential to serve as a strong support. Mr. Ju noted that traders run the risk of extreme losses if they attempt to trade against the institutional bets, ie if they increase their short positions below $ 23,000 against a majority of the long outlook.
The analyst was among the first to see Coinbase Pro Outflow in some cold wallets on December 18, just six days before Bitcoin hit an all-time high. He assumed the trading platform is closing OTC deals, adding that the recipients’ portfolios are in fact custodial portfolios.
“Like I said, it went to wallets that looked like custody. It looks like Coinbase is creating a new cold wallet for every customer after the OTC institutions deal. “
Coinbase Pro is sending a massive amount of BTC to individual wallets. Source: Kim-Young Ju
As the Coinbase Pro outflow continues to rise, this indicates a fresh rise in the Bitcoin market.
“I am very optimistic about BTC,” said Mr Ju.
Meanwhile, Alex Mashinsky, the founder of Celsius Network, has an opposite view of the Bitcoin market. The analyst noted that traders should not open new long positions or buy BTC based on a short-term movement of supply and demand.
“Watch out,” warned Mr. Mashinsky. “80% of the recent $ 8 billion in new shades of gray contributions are in kind and many of them with leverage of 2-4X. When funds are done selling, we will be back to the $ 16k level. About $ 4 billion in GBTC sales will take place in the next 3 months. “