A big correction in the crypto market is underway, putting bitcoin’s rally on track for the worst weekly price loss in almost a year. The world’s leading digital asset has been showing signs of weakness since the start of the week amid wider losses in the stock market.
The BTCUSD pair started shedding the profits it accumulated following the intense two-day market selloff at the start of the week, dropping to two-week lows below $45K on Friday.
Bitcoin’s lack of momentum comes amid mounting psychological pressure brought on by a surge in bond yields in the US. The jittering macro environment has forced investors to reassess their positions across various risk assets, including bitcoin.
As a result, the bulls have failed to gain traction above $50K, where BTC prices were wobbling in yesterday’s sessions. The top crypto plunged to a monthly low of $44,270 at 7:40 UTC before rebounding slightly to its current price of $45,839.
BTCUSD Chart By TradingView
Institutional Investors Are Buying The Dip
A flurry of recent institutional investment into BTC led by big players such Tesla, MicroStrategy, and Square has helped cement the coin’s store-of-value narrative on Wall Street.
As BTC prices fall amid fears of an early unwinding of the US government’s $1.9 trillion stimulus package, institutional investors are rushing in to buy the dip, according to one respected analyst.
CryptoQuant CEO Ki-Young Ju recently pointed to a BTC outflow from the US-based exchange Coinbase during the asset’s ongoing market selloff. Analysts from CryptoQuant flagged 12,380 bitcoin units worth over $575M leaving Coinbase on Thursday night. The coins were deposited into the exchange’s custody wallets.
Ki-Young Ju interpreted the outflow as a sign of increased institutional activity in the BTC market.
“It seems those BTC went to multiple Coinbase custody wallets. US institutional investors are still buying Bitcoin at the 48k price. This is the strongest bullish signal I’ve ever seen,” he tweeted.
What it all means for BTC prices
In recent months, surges in bitcoin outflows from exchanges have coincided with a major institution announcing its entry into the BTC market. For instance, a spike in Coinbase outflows that saw some 13,000 BTC leave the exchange at the low of the last correction followed Tesla’s disclosure of its $1.5 bn BTC purchase.
Yesterday’s deposit of $575 million into Coinbase’s custodial wallets could indicate that a big corporation or hedge fund may have made a huge BTC purchase.
Exchange outflows of this magnitude are usually positive for BTC, as they typically precede a strong bullish impulse and substantial price increase.