Institutions and whales are taking advantage of Bitcoin’s low price

Posted: 11 April 2022 2:54 am
BTC 04-12 1800x1000

Multiple institutional entities and whales have continued to accrue sizeable sums of BTC over the last couple of months.

  • Analysts believe that Bitcoin could slip down to the $37,000 range before showcasing a trend reversal.
  • Terra Protocol’s non-profit wing, the Luna Foundation Guard (LFG), recently purchased an additional 4,130 BTC, bringing its total crypto haul to 39,898 BTC.
  • The Federal Reserve plans on tightening its ongoing monetary clampdown even further by the start of May.

Bitcoin (BTC) continues to face increasing volatility. The flagship digital asset recently dipped from a relative high of $46,600 to under $39,400. As a result, BTCs weekly losses now stand at 10% while trading at $40,184.

With over $198 million wiped from the market since April 10, several prominent traders took to Twitter yesterday claiming that the coming few weeks could see Bitcoin retesting the all-important $54K resistance, with the asset potentially sliding as low as $37,000 before bouncing back.

Blockchain data firm Glassnode’s co-founders Yann Allemann and Jan Happel believe that the ongoing descent aligns with a general trend that the crypto market has faced recently, wherein weekend trade volumes continue to remain low. That said, Bitcoin whales are not deterred by this turbulence. Large volume token holders continue to fill up their coffers.

For example, an unidentified whale address has lapped up millions of dollars worth of BTC over the last couple of months using an investment strategy called dollar-cost averaging, which is designed to help mitigate long-term losses.

How to buy Bitcoin

Institutional action continues as usual

In addition to individual whales continuing to buy Bitcoin, institutional players have also been buying the digital asset since the start of the year. For example, blockchain protocol Terra recently confirmed that it had added a whopping 4,130 to its existing crypto pool via its associated non-profit, the LFG.

Earlier this month, the Terra Foundation announced that it was purchasing a total of $10 billion worth of Bitcoin in the near- to mid-term. The foundation’s native wallet address — which is the 19th largest of its kind — currently holds a total of 39,897.98 BTC, which is worth approximately $1.7 billion at press time.

Rising inflation to spur global economic volatility even further?

Robeco portfolio manager Jeroen Blokland said that the Federal Reserve’s decision to aggressively pursue its balance sheet alterations come May serves as a clear indication that more inflation may be on the cards. That said, future Fed vice chair Lael Brainard was recently quoted as saying:

“It is of paramount importance to get inflation down. Accordingly, the committee will continue tightening monetary policy methodically through a series of interest rate increases and by starting to reduce the balance sheet at a rapid pace as soon as our May meeting.”

Numbers-wise, inflation rates have continued to soar globally, with the Eurozone’s annual producer price inflation jumping by a staggering +30% over February alone, the highest ever spike in its recorded history. Even more troubling is that experts see the situation worsening, especially as the Russia-Ukraine war continues to show no signs of stopping anytime soon.

Interested in cryptocurrency? Learn more about the basics with our beginner’s guide to Bitcoin, dive deeper by learning about Ethereum and see what blockchain can do with our simple guide to DeFi.

Disclosure: The author owns a range of cryptocurrencies at the time of writing.

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