Multiple Bitcoin price metrics show traders are still bullish on BTC even after the drop below $22,000.
As Bitcoin (BTC) price tested the $17,580 low on Dec. 11, investors remained relatively calm despite some analysts issuing bearish estimates. Last week’s trading may have finished at the same level where it started, but the fundamentals for Bitcoin have become even stronger.
Each time Bitcoin makes a new high, investors expect some form of correction. Despite failing to break through the $24,000 resistance, the price quickly bounced from its sub- $22,000 dip on Dec. 21. This event might have given sellers some hope, but looking under the hood, there is not a single sign of weakness sign.
In the past week, Bitcoin dominance continued to gain as it climbed from 64.3% to 67.3%. This move was aided by the Dubai-based financial advisory firm deVere Group’s $46,000 prediction for 2021. Moreover, the Chicago Mercantile Exchange (CME) surpassed $1.3 billion of futures contracts. This creates indisputable evidence of the growing institutional participation in BTC markets.
This news appears to have given further confidence to investors, causing Bitcoin to reach a new $24,300 all-time high on Dec. 20.
In the past week, Bitcoin outperformed the top-15 altcoins, which climbed 7.7% on average. More importantly, the volume from altcoins has been disappointing compared to Bitcoin’s 50% increase. This indicator strengthens the recent dominance performance, as does BTC establishing $22,500 as a new support.
Institutional investors accumulate while Bitcoin price consolidates
Crypto fund manager Grayscale Investments also continued to aggressively add BTC to their portfolio which now contains $13.3 billion in Bitcoin.
Over the past week, 11,620 BTC were added, totaling 576,650 BTC. Therefore, it was another excellent week for Grayscale Bitcoin Trust. Similar excitement can be seen by analyzing the fund’s premium over the effective BTC held by each share, which currently sits at 0.00095064 BTC.
As shown above, the premium increased from 18% to 40% in the past seven days. This extraordinary level can be partially explained by a temporary suspension of new shares being issued.
Albeit unusual, a similar move occurred six months ago. By halting the offer to institutional clients, any additional demand needs to be met by secondary sales, thus creating pressure for a larger premium.