Institutions Are Yet To Turn Buyers Despite All Dips Bitcoin Had.
The recent rally is unsustainable, and Bitcoin is likely to dump again from the next Fed rate hike announcement, says a CryptoQuant analyst.
In a CryptoQuant Quicktake released on Wednesday, CryptoQuant analyst MAC.D warned of a possible price dump ahead when the Fed announces its rate hike for November as he notes that institutions are yet to turn bulls in the Bitcoin market.
According to the analyst, the latest rally in the asset price is not sustainable. Notably, the analyst bases his assertions on the lack of significant changes in the Coinbase Premium Index and the Fund Volume Index. MAC.D notes that while the former is positive, there have been no significant changes since June, and the latter remains in decline.
“Looking at the above two indicators, it will be difficult to think of it as an upward cycle conversion because there is no clear Institutional investors buying trend,” the analyst writes. “If prices rose without buying by Institutional investors before the FOMC rate announcement in November, it is likely to lose its upward momentum and dump it.”
Institutional investors not yet buying $BTC
"If prices rose without buying by Institutional investors before the FOMC rate announcement in November, it is likely to lose its upward momentum and dump it."
— CryptoQuant.com (@cryptoquant_com) October 6, 2022
The fact that Bitcoin has outperformed other equity markets recently and managed to reclaim and hold the $20k price point has sparked bullish sentiment and excitement amongst some investors. Also, among the positives, selling pressure appears to have eased as miners seem to have taken a break from selling. Moreover, as reported by The Crypto Basic on Wednesday, the asset has also seen significant, sustained accumulation.
According to @cryptoquant_com data, #Bitcoin miners’ reserves have plateaued at 1.86 million $BTC, holding around this level for nearly a month. The inactivity among miners follows a significant selloff in August. pic.twitter.com/6YSPWWyehy
— Ali (@ali_charts) October 1, 2022
However, despite these positives, as highlighted by the CryptoQuant analyst, it is too early to get excited. While October is historically seen as a good month for Bitcoin, it bears mentioning that this is not usually the case in bear markets, as highlighted by popular Bitcoin analyst Ali Martinez.
— Ali (@ali_charts) October 2, 2022
Notably, perceived risk assets continue to suffer from the continuous rate hikes by the Fed, which has made institutions significantly averse to risk. Meanwhile, the resulting dollar strength has also led to a decline in safe-haven assets like gold which is down about 10% year to date.
With continued market uncertainty resulting from persistent macroeconomic concerns, the best chance for a market shift is for the Fed to hit the brakes on raising rates and start economic easing, as Mike Novogratz has continuously iterated.
Bitcoin is trading below the $20k price point at $19,972.30 but is still up 2.51% in the last seven days.