Bitcoin has undergone an extremely strong rally over recent months, despite the ongoing drop.
The cryptocurrency, which trades for $36,000, is up around 100 percent in the past six weeks, and even more over the past six months. Other cryptocurrencies aside from BTC have also done well.
But what is behind the ongoing bull market? A Singapore-based trading desk suggests that the Bitcoin rally is largely a byproduct of institutional inflows entering the Bitcoin market via Grayscale. Grayscale Investments is a digital asset manager focused on institutions based in New York.
What’s driven Bitcoin higher?
Prop trading company and liquidity provider QCP Capital commented on Friday morning that Bitcoin’s recent rally has largely been a byproduct of Grayscale’s Bitcoin Trust, an institutional investment product for BTC.
Bitcoin began to show signs of weakness (spot buying pressure shifting to futures buying pressure) when Grayscale temporarily suspended inflows at the end of December.
The sell-off peaked early this week when the fund suspension came to an end, QCP explained:
“Previously we highlighted GBTC as too big to fail in our new year update, and the sell-off on Monday/Tuesday peaked at the end of their 2-week fund suspension to new investors. On Wednesday they reopened again and this stemmed the selloff, as ~5k of BTC was added to their fund in just the 2 days since.”
5/6 On Wednesday they reopened again and this stemmed the selloff, as ~5k of BTC was added to their fund in just the 2 days since. pic.twitter.com/KYuNHYGdNw