Institutional Bitcoin Buying Is A Positive Sign, Suggests Matrixport

Recent data from Matrixport, a digital asset financial services platform, confirm that institutional investors have not abandoned crypto, especially Bitcoin. According to data, institutional investors now account for 85% of Bitcoin purchasing. 

Matrixport’s head of research and strategy, Markus Thielen, said it shows that institutional investors are still very much interested in crypto and is also a sign that the bull market is near.

Bitcoin Performance During Trading Hours Distinguishes Buyers’ Sentiments

The report suggested that an asset’s performance during US or Asian trading hours can help distinguish whether institutional or retail investors favor it more.

Matrixport further explained that if an asset trading 24 hours performs well in the US trading hours, it shows United States institutional investors are buying it. However, if the asset performs well during Asian trading hours, it is an indicator that Asian retail investors are buying it.

The report cited Bitcoin’s performance (40% price gain since January 1) since the start of 2023. It stated that Bitcoin’s 40% rally, with 35% returns during US trading hours, indicates an 85% of BTC purchase is coming from US-based investors. According to the report, it is a sign that US institutions are currently buying Bitcoin.

Theilen cited previous data showing that institutional investors showed interest in Bitcoin before other assets. In his words, using historical data as a guide, layer1 and altcoins would start outperforming Bitcoin soon. 

The report also noted that news about other projects pushed the prices of tokens like Aptos (APT) and Lido DAO (LDO). It also stated that the crypto rally began on January 12 on the release of the US inflation data (Consumer Price Index) for December. 

A Look At BTC Fear And Greed Index Could Explain Matrixport’s Logic

The US bureau of labor and statistics released the December consumer price index (CPI) on January 12, 2023. The index at 6.5 came out lower than everyone expected, showing that the inflation rate is down. A lower inflation rate is often a bullish indicator in the crypto and financial markets, hence the logic behind Matrixport’s opinion.

According to the crypto finance strategist, a mixture of “strong” returns during US and Asian trading hours is responsible for APT’s price rally. 

However, the Bitcoin Fear and Greed Index is 55, showing investors are currently very greedy for Bitcoin. It means more investors are buying BTC at the current $22,963 price.

The emotions of buyers and sellers who actively trade in the market often influence crypto prices. It means negative news can bring down asset prices, while positive one can drive them to new all-time highs.

According to the Forbes Advisor, the fear and greed index gauges the overall sentiment and measures Bitcoin’s dominance in the market. The greedier the market, the more dominant Bitcoin becomes. Now that the Fear and Greed Index is high, more institutions and retail investors are turning to BTC, maybe for fear of missing out.

Therefore, when investors’ sentiment becomes very bullish, they buy more BTC and possibly increase returns. However, it is crucial to note that the Fear and Greed Index does not react to long-term bulls. It only follows current news events and short-term changes in the crypto market. 

It could be why Matrixport’s report cited the news around the December CPI as one factor driving more investors to buy Bitcoin. According to the report, a continuous increase in institutional adoption would be a positive sign for BTC.

Featured Image From Pixabay/ Tumisu, Charts From Tradingview