Bitcoin whales who took profit in late 2020 have inadvertently sold their Bitcoin trove to institutional investors who were waiting in the wings to get in, according to a new report.
Researchers at OKEx Insights looked at on-chain data from finance analytics platform Catallact and discovered that Bitcoin went on a steep ascent in the Q4 of 2020 as institutions piled into the largest cryptocurrency.
The report notes that on-chain transactions over 1,000 BTC surged from just above 5% to a high of over 45% in September 2020 and remained in the 30%-40% range.
“The conclusion we may draw from this on-chain data is that institutional investors really piled into the BTC space after Paul Tudor Jones announced his entrance – and they didn’t stop as 2020 came to a close. Additionally, we can assume that institutions were on the bidding end of the spectrum and buying large amounts of BTC – as opposed to selling – since the price of the leading cryptocurrency rose in a parabolic fashion throughout Q4 2020.”
To support their analysis, OKEx cross references the on-chain data with some big verified institutional purchases.
“For starters, we know for certain that business intelligence, mobile software and cloud-based services company MicroStrategy invested large sums of money into BTC last year. In August 2020, the firm purchased 21,000 coins for $250 million. This coincides with the increase of large transactions on the aforementioned charts.
Several more purchases from MicroStrategy took place in 2020. On Dec. 5, the company purchased 2,574 BTC for $50 million at an average price of $19,427 per coin. Later that month, on Dec. 22, it purchased another 29,646 coins for $650 million at an average price of approximately $21,925 each. Additionally, the Massachusetts Mutual Life Insurance Company invested $100 million in BTC in December – a sign that more institutional investors kept entering the market at that time.”
The report also looks at the sell-side to see which entities were unloading as large institutions purchased large sums of BTC. The researchers discovered that the average age of the BTC involved in the transactions increased in October 2020 and stayed high until the end of the year, suggesting that long-term holders sold into the rally.
“With the supply side of BTC failing to meet the institutional demand as the leading cryptocurrency entered price discovery, the coins being sold seemingly came from both long-term holders and Bitcoin miners. In other words, old-school Bitcoiners sold some of their old bags to new institutional buyers with extremely large new bags to fill – for better or worse.”