Data suggests large institutions in the United States aggressively purchased BTC during the Bitcoin crash to the $94,000 mark.
Over the past 24 hours, the crypto market has witnessed significant turbulence, as rapid market fluctuations have led to substantial losses. However, amid the chaos, a class of investors appears have doubled down on their convictions.
While the crypto market was thrown into a brief panic as Bitcoin experienced a sharp decline from the $97,000 price point to near $94,000, data suggests that institutional investors were aggressively buying.
US Institutions Leverage the Bitcoin Crash
This is according to a December 10 CryptoQuant report. The report highlighted that the Coinbase Premium Index experienced a significant surge from below -0.05 to 0.15.
Bitcoin Plummets, But Coinbase Premium Surges
“Rebound suggests that when excessive panic selling occurs on Binance, which has a higher proportion of small investors, U.S. institutional investors are likely to adopt an aggressive buying strategy.” – By @MAC_D46035
Link 👇… pic.twitter.com/eaXxRhemUp
— CryptoQuant.com (@cryptoquant_com) December 10, 2024
The Coinbase Premium Index is a metric that measures the percentage difference between the price of Bitcoin on Coinbase Pro, a platform favored by institutions, and Binance, a platform dominated by retail investors. When the metric is positive, it typically reflects higher demand from institutions than retail.
As highlighted in the chart from CryptoQuant, spikes in the Coinbase Premium Index, especially to around the 0.15 level, have correlated with significant price appreciations on four different occasions in the past month. These instances include price spikes from November 15, November 21, November 18, and December 3.
The recent increase in the Coinbase Premium Index suggests that institutional investors remain confident in Bitcoin’s long-term potential despite short-term price fluctuations. This conviction has shone through in 2024 amid the record-shattering growth of spot Bitcoin ETFs.
Notably, these investment vehicles have seen net inflows of over $33 billion since their launch in January 2024, holding a total of over $107 billion worth of BTC, per SoSoValue data at the time of writing. For context, U.S. gold ETFs launched in 2004 hold only about $138 billion per etf.com data at the time of writing.
