Analysis | Is Bitcoin’s move to 19,000 a result of institutional speculation?

At around 6 p.m. on November 24, data from Huobi Global showed that Bitcoin had risen to $19,099, just 5% away from its all-time high of $20,000. Bitcoin's "outstanding performance" is mainly due to the pursuit of institutional investors. After the U.S. version of Alipay, Paypal, announced that it would support the trading of cryptocurrencies such as Bitcoin, DBS, Singapore's largest commercial bank, will also launch a digital asset exchange, which will initially support Bitcoin, Bitcoin Cash, Ethereum and Ripple transactions. In addition, JPMorgan Chase, which has repeatedly criticized Bitcoin, also changed its tone and said, "Bitcoin's strong performance in 2020 may continue."

Another factor that cannot be ignored is that the Grayscale Fund currently manages over $10 billion worth of cryptocurrencies. The Grayscale Bitcoin Trust (GBTC) was founded in 2013 and is the company's largest trust. On November 17, Grayscale's BTC Trust increased its holdings by 1,773 BTC. As of now, Grayscale's holdings of Bitcoin have exceeded 500,000, accounting for 2.38% of the total Bitcoin.

Coinciding with the fact that Bitcoin has set new highs for the year, there has been a recent view that since the trusts issued by Grayscale are non-redeemable trust products, the funds issued by its funds are similar to air coins, and this round of rise is also a false market driven by institutional speculation.

Huobi Research Institute believes that we cannot deny its value just because it is not redeemable. In fact, Grayscale's trust products are an important compliance channel for many traditional financial institutions to enter the market and purchase Bitcoin financial products. According to information publicly disclosed by Nasdaq, as of the end of September 2020, GBTC had a total of 32 institutional investors. The largest holding is BlockFi, which holds 4.5% of GBTC shares. It is a well-known lending company in the currency circle. The second largest holding is Three Arrows Capital, which is one of the most active cryptocurrency hedge funds. In addition, there are Ark Investments (AKR), "Rothschild Investment Company", etc., which are all on the GBTC public holdings list.

At present, Bitcoin continues to rise and breaks through the 19,000 integer mark, which is very close to the historical high. Although the profit-taking in the market has accumulated considerably, this is a bull market triggered by institutions, and the strategy of institutions is still biased towards long-term holding. Short-term operations are not very frequent, so this may be one of the reasons why the market continues to rise without too much correction in the short term.

BTC fluctuated sideways during the day and broke through in the evening

According to the data from Huobi trading platform, BTC fluctuated sideways at 18380 during the day, and quickly broke through in the evening, rising from 18026 USDT to the current highest of 19099 USDT, an increase of more than 1000 USDT in four hours, continuing to hit a new high since December 2017. The competition between long and short sides was fierce, but the long side was obviously stronger. From the daily level, the increase on the 24th reversed the decline of the previous two days, and broke through the previous high of 18970. The rise may continue for a while, and it is expected to continue to hit a new historical high. In the evening, continue to pay attention to the changes in trading volume and the support of the 18400 line below.

According to the data from Huobi trading platform, ETH rose slightly in the morning and fluctuated around 610. After receiving the news that the number of pledges of Ethereum 2.0 reached the minimum launch requirement, the market fluctuated violently and there was a correction in the afternoon, with the lowest price reaching 589.39 USDT, but the bullish momentum was still strong. It then rose rapidly and rebounded to 622 USDT. It is currently trading sideways around 600. In the evening, we will continue to pay attention to the market volatility and the breakthrough of the 620 resistance level above and the support of the 600 integer level below.

In terms of contracts, Huobi contract big data shows that BTC contract holdings have increased slightly, contract trading volume has increased slightly, and the contract market is active. The basis of delivery contracts has increased slightly, and the funding rate of perpetual contracts has decreased slightly.

ETH contract open interest increased slightly, contract trading volume increased slightly, and the contract market was active. The basis of delivery contracts increased slightly, and the funding rate of perpetual contracts increased slightly.

The price of USDT in Huobi Global OTC market is 6.49 yuan.

According to Huobi Research Center data monitoring, the total DeFi locked volume (TVL) rose slightly to $17.39 billion on the 24th, and the real locked volume rose slightly to $11.93 billion. Among them, SushiSwap fell sharply, reaching 39.28%. The total DeFi transaction volume rose slightly on the 24th, reaching $802 million. Among them, dYdX rose sharply, reaching 38.46%.