Bitcoin over-the-counter (OTC) holdings, an often-overlooked aspect of cryptocurrency trading, have surged to their highest levels over the past year, with inflows consistently accelerating since May 2023, according to data from Glassnode then the outflow.
Over-The-Counter (OTC) trading refers to the direct exchange of assets such as Bitcoin between two parties, bypassing the traditional exchange. This off-exchange trading is done through a decentralized dealer network and often involves significant amounts of Bitcoin.
This is done via a decentralized dealer network. In the context of Bitcoin, OTC transactions are often used by whales who want to buy or sell Bitcoin without affecting the market price too much. This can be important because large trades on public exchanges can cause significant price swings.
OTC holdings refer to the amount of Bitcoin held by these OTC desks. These positions can provide insight into the behavior of large investors. For example, an increase in OTC holdings could suggest that more whales are buying Bitcoin through OTC transactions, possibly pointing to bullish market sentiment. Conversely, a decrease in OTC holdings can mean the opposite.
Bitcoin OTC holdings
Having started the year with a local low of around 2,969 BTC, OTC holdings have bounced back to reach 6,285 BTC on June 28, 2023, the highest level since May 2022.
Despite this recent surge, Bitcoin OTC holdings have yet to surpass their all-time high of 11,928 BTC, set on August 17, 2020. This record was set amid Bitcoin’s peak price of $68,692 on November 10, 2021.
Interestingly, the price of Bitcoin and OTC holdings appear to be loosely correlated, with OTC holdings slightly lagging BTC prices. As Bitcoin has been trading relatively flat since June 21, OTC holdings, for example, have experienced a 12.45% increase from 5,244 BTC to 5,899 BTC using a 30-day EMA. This increase took place while the price of Bitcoin remained around $30k.
Bitcoin OTC inflow
At the same time, Bitcoin OTC inflows have been continuously declining since their peak around the last Bitcoin halving in May 2020. At that time, OTC desks were seeing regular inflows of well above 6,000 BTC. However, as evidenced by the reduction in holdings, 2023 was less favorable, with inflows dropping to a 30-day EMA low of 394 BTC.
However, June appears to have reversed the trend, with inflows rising to around 645 BTC, a significant drop from pre-pandemic levels.
According to Glassnode data, a comparison of OTC inflows and outflows reveals a consistent excess of inflows since May 2023. This is especially notable as the last period of excess outflow was observed in March 2023.
While recent trends in OTC holdings and inflows indicate renewed market confidence in Bitcoin, the overall drop in inflows since 2020, coupled with the fact that OTC holdings are still significantly below their all-time highs, indicates that the market has significant room to spare. has for growth.
These trends and statistics are worth watching for investors and enthusiasts as they serve as critical indicators of whale sentiment and potential investment opportunities. Further, given the myriad bankruptcies, lawsuits, and other regulatory issues that have plagued the crypto industry over the past 12 months, OTC desk transactions are expected to see continued activity as reserves are reorganized or creditors are repaid.