BTC On-Chain Analysis: Exchange Balances Dry Up as Institutional Investment Picks Up

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In Brief
  • The exchange net position change has been negative since June 27.

  • The Purpose Bitcoin ETF holdings reached a new all-time high in July.

  • The futures funding rate is close to zero.

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A look at on-chain indicators for Bitcoin (BTC), more specifically those related to exchanges and institutional investors.

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The BTC balance held in exchange addresses has begun to decrease once more, while institutional investment has begun to grow.

Exchange balance

The total BTC held on exchange addresses has been decreasing since the March 2020 low. 

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The lowest value reached was 2,461,840 BTC on April 12. At the time, the price was close to $60,000. 

However, the recent downturn has caused numerous investors to sell their holdings, thus resulting in an increase in the number of tokens held in exchange addresses.

Chart By Glassnode
 

However, another downward trend has begun in the short-term, more specifically on June 26. A sharp fall occurred on July 7 when a total of 31,045 BTC left exchange addresses.

Chart By Glassnode

With the exception of June 28, the futures funding rate has been negative since June 16. This means that traders that have short positions opened pay a premium to those with long positions. 

On July 7, the funding rate moved to a negative 0.001%, a sharp increase from 0.017%, the value on July 5. 

While the rate is still negative, this shows a growing confidence in the market from futures traders.

Chart By Glassnode

Institutional investment for BTC

Despite the gradual decrease in price, institutional interest in BTC is not drying up.

To the contrary, the two most well-known exchange-traded funds, Grayscale and “The Purpose Bitcoin ETF” have been consistently increasing since March, meaning that institutions are “buying the dip.”

Source: Twitter

The increase is mostly attributed to the “Purpose Bitcoin ETF Holdings,” which have reached an all-time high of 22,411 BTC on July 6.

Chart By Glassnode

In addition to this, the Grayscale premium is also regaining some of its value. While it traded 21.23% below its actual value on May 13, it is now only trading at below 11.51%. This is a sign of increasing confidence in the index, despite the fact that the value is still negative. 

Chart By Glassnode

For BeInCrypto’s latest bitcoin (BTC) analysis, click here.

Disclaimer

All the information contained on our website is published in good faith and for general information purposes only. Any action the reader takes upon the information found on our website is strictly at their own risk.
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Valdrin discovered cryptocurrencies while he was getting his MSc in Financial Markets from the Barcelona graduate school of Economics. Shortly after graduating, he began writing for several different cryptocurrency related websites as a freelancer before eventually taking on the role of BeInCrypto's Senior Analyst.

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