Bitcoin (BTC) is having its best start to the year since 2013. The price of the largest cryptocurrency by market capitalization has jumped 40% this month amid weakness in the U.S. dollar. The rally has been powered predominantly by U.S. buyers, observers say.
- "Bitcoin is up +40% year to date with +35% of those returns occurring during U.S. trading hours. That's an 85% contribution of the rally associated with U.S.-based investors," Markus Thielen, head of research and strategy at crypto services provider Matrixport, said in a note to clients on Friday.
- "We interpret this as a clear signal that U.S. institutions are buyers of bitcoin right now," Thielen added.
- Bitcoin surged 51% in January 2013.
- Unlike stocks, bitcoin – and cryptocurrencies in general – trade 24 hours, allowing observers to keep track of order flows across different time zones and infer the source of buying or selling pressure.
- Institutions' bullish positioning is also evident from the renewed premium in bitcoin futures listed on the Chicago Mercantile Exchange.
- "Institutions are not only buying bitcoin spot; rather, we are also seeing consistently high premiums for perpetual futures. We interpret this as an indication that faster institutional traders and hedge funds are actively buying the recent dip in crypto markets," Thielen noted.
- Deutsche Digital Assets made a similar observation earlier this month, drawing attention to the uptick in Coinbase premium as evidence of increased buying interest from sophisticated U.S.-based investors relative to retail investors.
- "Traditional and crypto-focused hedge funds, corporates and traditional asset managers have been buying," Coinbase Institutional's head of research, David Guong, wrote in a weekly market commentary published Jan. 20.
- Bitcoin's institution-led bullish turnaround might be a good sign for the U.S. equity market, considering the cryptocurrency's record of bottoming out weeks ahead of the S&P 500.
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