The Coinbase outflows to custodial wallets, considered by CryptoQuant as an adequate price prediction tool, have caught the latest price increase that drove BTC from $32,000 to $37,000 in a few days.
The CEO of the analytics company attributed this to institutional demand and said that such purchases are among the most notable bullish signals.
Coinbase Outflows: Game Changer?
Ki Young Ju, the CEO of CryptoQuant, has repeatedly highlighted the importance of Coinbase BTC outflows. He explained that if the large US-based cryptocurrency exchange “moves a significant amount of bitcoins to other cold wallets, it would indicate OTC deals.”
Furthermore, Genesis Trading, which is used by the leading digital asset manager Grayscale, employs the Coinbase OTC desk.
“Since the price is eventually determined on exchanges, massive non-exchange transaction volume is considered as a bullish signal. These transactions include OTC deals.” – Ju added.
Keeping in mind the aforementioned arguments, he pointed out on Monday a substantial outflow from Coinbase of 15,000 bitcoins when the asset price was $32,400. This sizeable amount had a value just shy of $500 million at the time.
CryptoQuant’s CEO followed the transactions that ended up on custody wallets that “only have in-going transactions.” As such, he believes that it was “likely to be OTC deals from institutional investors.”
The Subsequent Price Increase
As mentioned above, BTC traded at $32,400 when the coins were transferred out of Coinbase to custody wallets. However, it seems that the described as “the strongest bullish signal” by Ju has indeed worked.
In the following days, bitcoin initiated an impressive leg up, broke out of its consolidation triangle, and reached a high of nearly $37,000. Despite retracing slightly, BTC is still up by more than 10%.
Consequently, Ju concluded that this development could be yet another confirmation that “institutional buying is the strongest bullish signal overriding all other bearish signals.”
Bitcoin Price Compared With Coinbase Outflows. Source: CryptoQuant
Separately, if this data indeed suggests that institutions have kept allocating funds into BTC, it could debunk the opposite narrative brought by Guggenheim Partner’s CIO Scott Minerd.
He believes that demand from corporations and institutional investors is currently insufficient to maintain bitcoin’s price at such high levels and even projected a possible 50% correction from the $42,000 top.
Title: Analyst: $32.4K Was The Short-Term Bottom For Bitcoin Price
Sourced From: cryptopotato.com/analyst-32-4k-was-the-short-term-bottom-for-bitcoin-price/
Published Date: Wed, 03 Feb 2021 12:15:30 +0000