Some bought the dip, others decided to wait it out.
As the COVID-19 pandemic began, retail and institutional Bitcoin investors took very different approaches, new research from OKEx Insights and Catallact showed.
The
research, which looked at on-chain BTC transaction data from January to
the beginning of August 2020, found retail investors largely pulled
back and took a wait and see strategy with Bitcoin. Larger, possibly
more institutional investors, on the other hand, accumulated BTC. The
report does not take into account transactions in the bulk of August and
September when prices fell.
Retail transactions, those
representing less than one-tenth of a coin, make up the bulk of BTC
movement and more closely track price fluctuations. These investors tend
to be more easily “‘shaken out’ of the market in times of high
volatility and dramatic price declines,” the report noted, which is
exactly what the researchers found.
The
number of daily small BTC transactions decreased and took a
wait-and-see approach once the price of BTC hit $10,000 in May. Source:
Catallact
Based on the data, retail transactions “decreased
and deviated away from the price’s trend—suggesting that retail
investors took a wait-and-see approach as BTC a season-long, post-crash
accumulation period” around May.
Medium transactions, attributed
to miners and larger retail players, were more cautious at the
pandemic’s onset. But it seemed this behavior lasted only until June
when activity picked up again.
It’s when the data moves to track
transactions over 1,000 BTC that becomes interesting. As BTC approach
$10,000, the number of transactions between 1,000 and 5,000 BTC
continued to go up since the end of June even as the price began to
consolidate.
“This upward trend suggests the possibility that
institutions and/or large players got busy accumulating BTC as economic
stimulus measures from central banks spurred on the purchase of hard
assets. However, because we cannot cleanly differentiate what actual
activity took place from the number of transactions alone, this only
remains a speculative possibility,” the report noted.
Transactions
of 5,000 BTC and upwards also saw spikes from mid-May to mid-July,
which led the researchers to two potential conclusions: cryptocurrency
exchanges may have been shifting coins in various wallets for different
reasons, most likely security, or large institutional investors entered
the market and accumulated BTC in anticipation of prices increasing or
decreasing. The report noted COVID-19’s impact on global markets might
have caused big investors to turn to BTC as a hedge against fiat
inflation.
The
number of transactions of between 5,000 and 10,000 BTC saw dramatic
increases throughout the summer of Bitcoin's price consolidation.
Source: Catallact
OKEx’s report showed the first few months
of the pandemic impacted how people moved within the market,
particularly as retail investors pulled back to await prices going back
to normal again. Large investors, on the other hand, “bought the dip”
and began accumulating BTC.
Cointelegraph reported BTC prices are boring and stable right not, but it could hit $16,000 if the resistance level breaks.
source link : https://cointelegraph.com/news/covid-19-shook-out-retail-investors-but-emboldened-btc-whales-report
