As the price of bitcoin struggles to surpass the $24,000 mark but remains healthily above $23,000, outflows on popular cryptocurrency exchange Coinbase suggest institutions have kept on buying BTC.
On-chain analytics data firm CryptoQuant pointed out on social media that Coinbase Pro, the professional trading platform of the San Francisco-based exchange that has signaled its intention to conduct a registered public offering, has seen at least two transactions of 12,000 BTC moving out of its wallets.
These large transactions out of the exchange imply institutions are buying bitcoin. Ki Young Ju, CEO of CryptoQuant, speculated on social media that the funds moved to “custody-looked-like wallets,” and could potentially be cold wallets the exchange set up for its customers after conducting over-the-counter deals for them.
If these were institutions buying BTC, the volume is noteworthy as, since the block reward halving, the rate of new BTC entering the market has slowed down. In November, it’s estimated miners minted just under 28,000 BTC in block rewards, barely enough to cover both Coinbase transactions.
This implies a supply squeeze that some believe will lead to further upward price movements. On top of that Grayscale Investments, the largest cryptocurrency asset manager, has added $3.4 billion to its assets under management in a week, bringing the total to $16.4 billion. The lion’s share of the assets is in its Bitcoin Trust, GBTC.
Institutional demand for the flagship cryptocurrency is in contrast with several factors negatively affecting the market, including the recently filed lawsuit against Ripple Lab by the U.S. Securities and Exchange Commission (SEC).
Per The Wall Street Journal, at the heart of the lawsuit is whether XRP is a security that should have been registered with the regulator or not. As Ripple did not register XRP as a securities offering, the regulator argues investors did not have adequate information, and as such the defendants had an unfair advantage.
Moreover, the market is awaiting the distribution of funds to Mt Gox’s creditors, who after waiting years to receive their BC may be keen to sell their funds on the market and close that chapter of their lives. This would result in 140,000 BTC being sold on the market.
Featured image via Pixabay.