Bitcoin price rally fueled by $ 1.6 billion purchase of whales, blockchain data shows

One or a group of big bitcoin buyers, also known as bitcoin whales, appear to be behind Wednesday’s price hike, based on data showing large purchases of bitcoin on exchanges at the start of hours of negotiation in the United States.

But why the whale – or whales – placed nearly $ 1.6 billion bitcoin buy orders in minutes on a centralized exchange remains unclear.

At the time of going to press, bitcoin was changing hands at $ 54,938.47, up 7.89% in the past 24 hours, according to CoinDesk 20.

According to South Korea-based blockchain data company CryptoQuant, someone or a group of people bought the massive amount of bitcoin in the spot market on centralized exchanges between 1:11 p.m. and 1:16 p.m. UTC on Wednesday.

The time to buy came shortly after U.S. Republicans shared favorable comments on cryptocurrencies and amid heightened market expectations that the U.S. may soon approve a bitcoin exchange fund. in the long term.

The purchase could have started on Coinbase, CryptoQuant co-founder and CEO Ki Young Ju told CoinDesk. He pointed out that the ‘Coinbase premium’ rose sharply around the same time before dropping again.

The ‘Coinbase Prime’ is an indicator showing the spread between Coinbase’s BTC / US dollar (USD) pair and Binance’s BTC / USDT pair involving tether stablecoin. When the number increases, it usually reflects stronger purchasing power on Coinbase, the centralized exchange.

But Willy Woo, an independent blockchain data analyst, disagreed with this account. He told CoinDesk that the purchase was primarily from Binance, citing data from another blockchain data company Glassnode.

According to Glassnode, the hourly charts of net transfer volume for bitcoin to and from Coinbase, or the difference in volume entering and leaving Coinbase, were more neutral compared to its competitor Binance, on a 48-hour moving average.

On Binance, the difference in the volume of bitcoin entering and exiting the exchange has been negative since last weekend.

I “saw no net stream coming out of [Coinbase] [and] furthermore, shopping on this site is not that unusual compared to other exchanges, ”said Woo. “The buy actually seemed stronger on Binance… Coinbase was selling more than buying.”

Lucas Outumuro, head of research at IntoTheBlock, a blockchain data company based in Miami, Fla., Also said the purchase was primarily from Binance, citing data from his own company.

Whichever exchange was responsible for the large order that seemed to drive the bitcoin spike, the bigger question is why the purchase took place on an exchange.

Large orders for bitcoin are usually placed in the over-the-counter (OTC) market. This way, the transactions will not cause the prices to move as they would if the transactions were occurring in the spot market through exchanges.

A major buy in the spot market that potentially drove the market up dramatically looks suspicious to CryptoQuant’s Ju, who suggested the whales were trying to spark interest from other investors by creating a price increase. These investors would then be afraid of missing out on the push. “Sometimes you have to manipulate the price to make FOMO (fear of running out),” Ju said.

But Outumuro said large purchases through OTC bureaus may be too slow for some traders due to the current bullish sentiment in the market.

“Given that bitcoin has broken out of a multi-month trendline and above a local high, I would say there is a large amount of dynamic trading in the spot markets – with volume and a high conviction, ”he said.

Indeed, the market’s attention has now returned to bitcoin in full bullish mode: As bitcoin surpassed $ 54,000 on Wednesday, institutional interest in bitcoin has also increased significantly.

One-month Chicago Mercantile Exchange (CME) -based bitcoin futures trade at an annualized premium of up to 17.73% over the spot price, according to derivatives research firm Skew.

As CoinDesk reported, the increase in CME bitcoin futures premium shows higher demand among CME traders to build long exposure in bitcoin. In the crypto market, analysts and traders consider CME to be synonymous with institutional investors.

“It’s rare to see BTC in the top 5% of crypto assets in 24 hours,” wrote lead digital asset broker Genesis in its newsletter on Wednesday. “Given that BTC is the ‘slipway’ for many large institutions, … this further reinforces the conclusion that this surge is institutionally driven.” (Genesis is owned by Digital Currency Group, which also owns CoinDesk.)

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