According to the CryptoQuant analytical platform, the reserves of cryptocurrency exchanges have dropped to values that were last recorded before the Bitcoin crash in May. Experts suggest that this trend indicates an active accumulation of cryptocurrency – and especially on the part of large investors. The rapid growth of BTC lately confirms this theory.
Note that the entry of large professional investors or so-called institutions into the cryptocurrency industry was the dream of many during the previous bull run in 2017. Now it is a reality that is beyond doubt.
The trend for the purchase of Bitcoins set by MicroStrategy; which in August 2020 acquired the first batch of cryptocurrency of 21,454 Bitcoins for $ 250 million. As a result, as of now; the company has invested $ 2.74 billion in BTC, and its total balance is 105,085 Bitcoins.
The presence of large investors in the niche is noticeable not only due to public announcements of buying coins. Researchers take information about what is happening from a transparent blockchain that allows you to track any transactions. This is how analysts understand what the big players with digital assets are doing.
Why is Bitcoin growing?
To date, the total reserves of crypto exchanges are hovering around the 1.256 million BTC mark. The last time such a value of this indicator observed on May 11; that is, just a week before the grandiose collapse of the market. Analyst William Clemente noted that the large-scale correction of Bitcoin this spring was not perceived by investors as the beginning of a global bearish trend – on the contrary, they only started buying BTC more actively.
The decline in the volume of cryptocurrency reserves is traditionally considered the reason for a new stage of bull run. The explanation is very simple. In this case, investors buy Bitcoins and massively withdraw them to their cryptocurrency wallets; as if they do not want to sell coins in the near future.
And since there are few sellers in the market, the asset has more room to grow. In turn, continued growth attracts new investors; which even more affects the value of the asset and its popularity among newcomers.
The quick rebound of the Bitcoin price from the $ 28-30 thousand mark demonstrated that this level has become quite attractive for most large investors and forced them to re-enter the market. They still continue to actively accumulate BTC, thereby reducing the number of free coins in circulation.
With a new wave of popularity of cryptocurrency, this may well lead to its growth up to a historical maximum. And as soon as Bitcoin overcomes this mark, its rise in price to 100 thousand dollars, which was mentioned by Bloomberg analyst Mike McGlone the day before, will remain only a matter of time.
We believe that what is happening in the cryptocurrency market really hints at the continuation of the bull run, which started in the second half of last year. And although now Bitcoin has dropped noticeably compared to the local maximum at $ 46,743, this is normal, because any asset cannot grow without corrections.
Therefore, in this case, it is better to monitor fundamental indicators such as BTC stocks on exchanges and the activity of large players. They are usually ahead of trends and set the direction of the market.