Over the past two weeks, the Bitcoin market has seen overwhelming seller dominance, with no significant input from the bulls influencing the price. As the flagship cryptocurrency entered a recession, investors increasingly fled the market out of fear, pushing prices further down. However, now that the Bitcoin price appears to have found stability, an interesting revelation has also come to light. If this change proves to be sustainable, it could mean something positive for the world’s leading cryptocurrency.
Accelerated outflow of OTC, sign of possible turnaround?
In their last post on the CryptoQuant platformCoinNiel shares an exciting hypothesis for the Bitcoin price, based on data from Bitcoin: Total OTC Desk Balance. The analyst points out that the Bitcoin price may be at a point where a reversal is imminent. For context, the Bitcoin: Total OTC Desk Balance metric measures the total amount of Bitcoin currently held in wallets associated with over-the-counter (OTC) trading desks. When the balance increases, it often means more BTC is moved to these OTC counters. This is also a telltale sign of the increasing selling appetite among Bitcoin’s major holders.
On the contrary, declining values on this measure generally indicate Bitcoin being withdrawn from OTC desks. By extension, this could imply that institutional demand is growing, or that large holders are no longer positioning themselves for sales. According to the chart below, the total OTC agency balance has seen a sharp downward trend, meaning a significant amount of BTC has been shipped out of the OTC market. Remarkably, this shift in investor behavior is happening around the same time as Bitcoin regained its $68,000 position.
As a result, BTC market sentiment appears to be shifting from pessimistic to slightly optimistic: instead of accumulating BTC for sale, OTC balances are shrinking. This could be caused by increased buying from large holders or reduced sales appetite among Bitcoin market participants.
In the scenario where Bitcoin’s institutional accumulation increases, this could be a sign that Bitcoin price will soon make a major upward move. On the other hand, reduced selling activity is also good for the Bitcoin price as it translates into reduced selling pressure, allowing for a short-term recovery in the flagship price. CoinNiel therefore caveats that the true drivers behind this dynamic have yet to be confirmed. As a result, investors and other market participants must be alert when engaging in the Bitcoin market.
Bitcoin price at a glance
At the time of writing, Bitcoin is valued at $67,953, reflecting a 24-hour devaluation of 0.17% according to CoinMarketCap data. Over the past seven days, the flagship cryptocurrency has lost around 2.81% of its value so far.
