Surge in Big Investor Interest Boosts Bitcoin to Record Highs

  • Ark Invest's recent Bitcoin report highlights a significant increase in institutional interest in Bitcoin, with data showing that approximately 70% of circulating Bitcoin has not moved for at least a year, indicating investor confidence and long-term commitment.
  • Bitcoin's supply levels on Over-the-Counter (OTC) desks, which often reflect institutional activity, reached a record high in June, demonstrating a growing focus on Bitcoin as an investment option by major institutions and capital allocators.
  • Despite positive Bitcoin trends, there are economic challenges to consider. The report notes diverging trends between stablecoins USDC and Tether, along with declining new order rates in the manufacturing sector and consecutive contractions in U.S. GDP, indicating a potential recession. These global economic indicators could impact the cryptocurrency market, including in South Africa.

In their most recent report on Bitcoin for June, Ark Invest drew attention to the escalating backing from substantial investors, underscoring the heightened institutional inclination towards Bitcoin, the leading player in the realm of cryptocurrencies.

The analysis conducted by Ark Invest suggests that a remarkable 70% of Bitcoin currently in circulation has remained unmoved for at least a year. This highlights not just the steadfast commitment of investors, but also the increasing confidence of long-term Bitcoin investors, a phenomenon that should warrant the attention of South African cryptocurrency stakeholders.

June saw Bitcoin wrap up at $30,460 (or ZAR 570,190.60 at the current exchange rate), reflecting an encouraging monthly rise of 11.9%. The cryptocurrency managed to find firm technical support at the 200-week moving average level, closing above 14% of the bearish level.

Institutional Sensitivity on the Rise

Since BlackRock lodged an application for a Bitcoin Exchange-Traded Fund (ETF) spot on June 15, the discount rate of the Grayscale Bitcoin Trust (GBTC), gauged on asset value, has contracted from 42% to 30%, marking its lowest level in a year. This narrowing of the discount rate might be a reflection of the market’s anticipations regarding Bitcoin ETF approval, thereby increasing the likelihood of GBTC transitioning into an ETF.

Last week, Ark Invest declared BlackRock’s ETF application as potentially a “turning point” for Bitcoin. Subsequently, the Chicago Board Options Exchange (Cboe) amended an application to introduce a surveillance sharing agreement similar to BlackRock, which includes Ark’s own Bitcoin ETF application. As per Bloomberg, Ark is leading the pack in the race for a Bitcoin ETF spot, competing against prominent names like Invesco, Valkyrie, and Fidelity.

Simultaneously, Bitcoin balances on Over-the-Counter (OTC) trading desks, often used as a gauge of institutional activity, reached a record-breaking level in June. OTC Bitcoin balances swelled by 60% at the quarter’s close. This surge indicates that institutions and major capital allocators are progressively turning their focus to Bitcoin as an investment option. For South Africa, this trend could be insightful for institutional investors seeking to diversify their portfolios and expand into the cryptocurrency market.

The Ark Invest report also shed light on a diverging pattern between USDC and Tether. While USDC has seen a 37% reduction in supply since the year’s start, Tether has witnessed a 25% increase, reaching an all-time high in June. Ark attributes this divergence to the unpredictable regulatory climate in the U.S., which is pushing some crypto activities overseas, and the complications following the temporary freeze of USDC in March when Circle revealed its failed USDC reserves of $3.3 billion (approximately ZAR 61.75 billion) with Silicon Valley Bank.

Despite the positive indications for Bitcoin, Ark’s report underscored several economic challenges. Manufacturing sector data pointed towards a decrease in new orders as per the Purchasing Managers’ Index. Concurrently, the U.S. Gross Domestic Product (GDP) has been showing successive contractions, hinting at a potential recession. South African Bitcoin investors should carefully monitor these global economic indicators as they could influence the health of the cryptocurrency market.

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