As a seasoned analyst with over two decades of experience in the financial markets, I have witnessed numerous bull and bear cycles, and the current Bitcoin phenomenon is one that I find particularly intriguing. The “Uptober” narrative, as it has been coined, seems to be holding strong this year, with BTC on the verge of setting a new all-time high.
With Bitcoin (BTC) flirting ever closer to a brand-new record peak, the volume of daily trades on over-the-counter (OTC) desks has sunk to its lowest point in a year.
Bitcoin’s “Uptober” Narrative Remains Intact
As a crypto investor, I’m thrilled to report that after a slow beginning, October has proven to be a remarkably successful month for Bitcoin. It’s surged past the 13% mark, bringing us closer than ever to a brand-new All-Time High (ATH)!
The top digital currency’s recovery in value is bolstering confidence in the “Uptober” theory, aiming to post its largest monthly increases since hitting an all-time high (ATH) of $73,737 in March 2024.
According to crypto analytics firm CryptoQuant, the amount of Bitcoin held by Over-The-Counter (OTC) trading desks has significantly increased to around 416,000 Bitcoins, which is equivalent to approximately $30 billion. Notably, during Q1 of 2024, these desks typically had less than 200,000 Bitcoins in their holdings on average.
As a researcher delving into financial markets, let me clarify the function of Over-The-Counter (OTC) desks. These platforms are often utilized by experienced and savvy investors for executing trades in underlying assets, all while minimizing any potential impact on the asset’s current market price. Furthermore, OTC trades provide institutional investors with an opportunity to conduct transactions discreetly, meaning their transactions won’t be recorded on an exchange’s trading books.
As a crypto investor, I’ve noticed that large over-the-counter (OTC) desks hold substantial amounts of Bitcoin (BTC). This means that when US-based spot exchange-traded funds (ETFs) decide to purchase BTC, they can do so without directly impacting the current market price at the spot level.
How Do OTC Desk Inflows Impact Bitcoin Price?
Based on figures from SoSoValue, Bitcoin Spot ETFs saw a combined daily influx exceeding $870 million on October 29th. Yet, this amount equates to roughly 2% of the overall Bitcoin supply held by Over-The-Counter (OTC) trading desks.
During Q1 of 2024, after Bitcoin reached its all-time high due to ETF approval, the percentage of Bitcoin bought by spot ETFs from the total amount of Bitcoin held in Over-The-Counter (OTC) reserves varied between 9% and 12%.
Starting from early September, the overall Over-the-Counter (OTC) desk Bitcoin balance has remained consistent. Conversely, the 30-day change, which monitors the net change in Bitcoins held over the past month, showed a significant drop. In September, it was approximately 3,000 BTC, while in June, it reached as high as 92,000 BTC.
During the first quarter of 2024, the 30-day trend showed a decrease, suggesting that big purchasers were amassing Bitcoin aggressively since more Bitcoin was taken out of Over-the-Counter (OTC) trading desks than put in.
Instead, an increase in BTC deposits over a 30-day period could indicate less demand for buying or even selling, as there might have been more deposits made compared to withdrawals.
Previously noted, the daily inflows at Over-The-Counter (OTC) desks have decreased significantly since their peak in June, hitting the lowest point for the year in 2024. A potential continued drop in these daily OTC desk inflows might drive Bitcoin to new record highs.
According to data from CryptoQuant, the average amount of Bitcoin traded on OTC desks was nearly 90,000 BTC in October, marking a significant drop of over 52% when compared to the first, second, and third quarters of 2024.
More recently, Markus Thielen, who leads research at 10X Research, stated that the likelihood of a significant cryptocurrency surge is quite substantial during the last quarter of 2024.
The high interest in Bitcoin (BTC), along with a scarce availability from Over-The-Counter (OTC) sources, could drive BTC to reach a record high price (ATH) for the first time. Currently, BTC is trading at $72,002, showing a 0.7% decrease over the last 24 hours.
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2024-10-31 16:12