Chainalysis Claim Institutional Investors Activities Is Driving The Price Of Bitcoin
Chainalysis, a data analysis platform, has reported that the current supply drought in the Bitcoin market is the pivotal factor that has contributed to the surge of the digital asset.
One thing that should be noted in any market is the significant influence of two entities, the market’s supply, and demand. With this in mind, one need not be surprised that Bitcoin has been able to bury its woes of the previous month to trade at $18,000 after trying to break out of the $12,000 price region last month. According to Chainalysis, two integral factors contributing to the price surge are increased demand and a prolonged supply rate.
77% of the Bitcoin in circulation are in illiquid wallets
With this in mind, the questions on everyone’s lips are who exactly the people are trying to buy Bitcoin and why they cannot get enough of the digital asset in the market. Chainalysis provided answers to the questions as it points to the activities of institutional investors in the market. In its recent report, Chainalysis said institutional investors are to be blamed or thanked based on what each person in the crypto market feels.
Chainalysis said that they are the architect behind the supply drought and still are why the coin’s price is surging, hence the thank and blame scenario. According to its blog post, Chainalysis noted that the total supply of Bitcoin increases every day.
Still, the available amount is mostly dependent on the people holding the leading digital asset. Today, 14.8 million Bitcoin have been mined, and 77% of this figure is currently in different illiquid wallets across the market. Illiquid wallets are classified as wallets that have sent less than at least 25% of the total Bitcoin that it has received ever.
Institutional investors are powering the Bitcoin surge
Chaainalysis noted that with the amount of Bitcoin in illiquid wallets, buyers are just left with around 3.4 million as demand for the digital asset surge every day. Making a case for institutional investments, Chainalysis talked about the investments that have been made by investment giants MicroStrategy and Square. The data analysis platform also pointed to the latest statements released by Paul Tudor Jones, a hedge fund manager, as another example of increased participation by institutional investors.
Furthermore, Chainalysis said that these recent accumulations by institutional events had benefited North American exchanges as they have witnessed a massive inflow of Bitcoin since the beginning of the year. “We have been expecting this trend for a long time before it finally surfaced.
With institutional investors powering this current surge in the Bitcoin market, people based across Europe and the United States will be eager to buy more of the coin from exchanges either for their use or for regulatory reasons. In its review, Chainalysis noted Bitcoin is currently scarce in supply because investors are hoarding it, and first-time buyers are driving up the demand for the coin.