“Buy the Dip!”; China FUD for Individuals | What the Blxck?!
Institutional cryptocurrency purchases have spiked during the recent market crash.
Topic at a Glance…
· Chinese government announced that it is considering re-applying past discriminations against the cryptocurrency community.
· Flash crash from the FUD also saw a large increase in institutional investment in Bitcoin.
Cryptocurrency markets saw another flash crash after “black Wednesday” last week, prices plummeting about 10% in a matter of minutes on the news that China was considering a ban on mining Bitcoin. At the same time, large institutional investors entered the market with buy order volume skyrocketing on the dip, leading to a quick bounce.
China Considers Crackdown
As a result of a meeting of the Chinese Financial Committee, one of the requests of the committee was to “resolutely prevent and control financial risks.” Part of this resolution would be to “…crack down on Bitcoin mining and trading behavior…”
This led to many mainstream news sources reporting that China was offering up a fresh ban on activities surrounding cryptocurrencies. As reported by What the Blxck?! in the previous editorial, this is more a reiteration or recycling of previous statements made by the Chinese government. It’s a manipulation that is not unheard of in the decade long history of the marketplace.
Institutional Investment Rises
While the news did lead to a clearing of overleveraged traders from the market, it also opened the path wide open for institutional investors to make big buy orders. According to Glassnode data, Bitcoin saw the largest over-the-counter desk outflow since the beginning of the year, with OTC desk-connected wallets courting a volume of 11,056 $BTC over last Wednesday and Thursday.
According to reporting from CoinDesk, “Institutions or large investors typically make investments through OTC desks to avoid influencing asset prices on exchanges. Thus, outflows from OTC desks are widely taken to represent institutional buying – large traders moving coins from OTC addresses to their wallets.”
The fact that we saw the surge of institutional investment at around the $30,000 price-point means that the price will not likely dip below that level into the future. However, individual traders and participants need to be wary of the tricks and manipulations often seen in the cryptocurrency marketplace. Otherwise, you could find yourself holding an empty bag.
As always, What the Blxck?! editorials should not be considered or construed as financial advice.