Bitcoin: Will Institutional Interest Be BTC’s Savior?

by James · February 12, 2023

CME Open Interest in Bitcoin grew, suggesting a decrease in volatility.
Miner incomes fell while selling pressure increased.

According to a tweet from Arcane Research on January 31, Bitcoin’s [BTC] the rally slowed. Despite this, institutional interest in Bitcoin continued to grow.

Ahead of the curve – 31 January

Bitcoin’s momentum has stalled and we are seeing the first tendencies of increased risk appetite from offshore longs while institutional participation remains high as the FOMC press conference approaches.

— Arcane Research (@ArcaneResearch) 31 January 2023

Read Bitcoins [BTC] Price prediction 2023-2024

An indicator of high institutional interest in Bitcoin was the growing CME Open Interest in Bitcoin. According to Arcane Research, the share of open interest in Bitcoin that is not related to exchange-traded funds (ETFs) increased from 53% to 57%.

This increase, along with a strong presence of institutional investors in Bitcoin futures, is a positive sign. The CME played a key role in determining the price of Bitcoin and was a driving force behind significant changes in the market in October 2020 and April 2021.

Source: mystical research

Along with the increasing institutional interest, the implied volatility for BTC fell. Over the past seven days, Bitcoin has remained relatively stable, hovering around $23,000, which has reduced implied volatility.

At press time, implied volatility was in the 50s, even for longer timeframes. This was similar to the levels seen in early November, when the options market predicted a slower pace in the market.

Source: mystical research

Miners are struggling

Along with increased institutional interest in the Bitcoin derivatives market, retail investors gained interest in Bitcoin as well. In accordance Glass nodeincreased the number of addresses by more than 0.01 coins on the addresses in the last month.

At press time, the number of Bitcoin addresses with more than one coin reached a record high of 4.21 million.

But while retail investors showed interest in Bitcoin, miners did not have a great time. Over the past week, the income generated by Bitcoin miners has decreased significantly. Along with that, the rising prices of electricity also affected miners negatively.

Hashrate Index’s analysis of how US electricity prices affected the Bitcoin mining industry in 2022. The double pressure of rising electricity prices and falling bitcoin prices has led to the bankruptcy of some biggest companies such as Core Scientific. pic.twitter.com/JkL0p3oLSH

— Wu Blockchain (@WuBlockchain) 31 January 2023

This could increase the selling pressure on miners, which could motivate them to sell their holdings and negatively affect the price of BTC.

Source: Glassnode

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Another indicator of increasing selling pressure on holders will be the rising MVRV ratio, as evidenced by Santiment. This indicated that most of the addresses with Bitcoin could profit by selling their positions.

The Long/Short indicator was negative, suggesting that it would be short-term holders who would profit the most from selling their positions. It remains to be seen whether these short-term owners decide to sell their holdings or continue to HODL.