Analysts warn of “institutional exhaustion” as Bitcoin price is back below $ 32,000

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Bitcoin (BTC) price rebounded in the past two days after falling to $ 28,850. However, after the rapid rebound, BTC failed to break the stiff resistance of $ 33,000 on Jan. 23 and was back below $ 32,000 at the time of writing.

BTC / USD 1-hour price chart (Coinbase). Source: TradingView.com

The return of the Coinbase premium is bullish, but now what?

Previously, when the price of Bitcoin fell below $ 32,000, BTC traded much lower on Coinbase than it did on Binance.

The lack of rewards for Coinbase was worrying for two main reasons. First, Bitcoin naturally trades higher at Coinbase due to Tether’s low premium.

Second, when Coinbase sees a lower price than other exchanges, it shows that there is high selling pressure in the US market.

As the selling pressure on Bitcoin began to mount in the US market, the price of BTC felt strong in a short period of time.

BTC / USD (white) vs. Coinbase Premium Index (blue). Source: CryptoQuant

But almost immediately after BTC rebounded from $ 30,000, the Coinbase premium reappeared. At the time of writing, BTC is around $ 40 higher on Coinbase than it is on Binance.

The Coinbase premium, which reappears after almost 12 hours, is a positive sign of a possible trend reversal.

Signs of “institutional exhaustion”

But in the short term, all of them are anything but bullish. Analysts at QCP Capital, a team of traders in Asia, see several signs of “institutional exhaustion”.

Given that institutional demand for Bitcoin from the US has been the main narrative in recent times, the rally could be in jeopardy if institutional appetite for BTC slows. They said:

“Signs of institutional exhaustion: We performed a time zone analysis that breaks down BTC movements in Asian hours versus US hours (12 hours each). As of March last year, the clear pattern has been a relentless buy in the US while Asian whales and miners are on sale. “

Bitcoin is losing strength in the US. Source: QCP Capital

Traders found that the strength of the US trading session lost momentum for the first time.

In fact, most of the BTC selling pressure over the past week has come from Asia. This marks a major shift in market sentiment. They added:

“After the BTC top two weeks ago, the strength in the US hours lost momentum for the first time. This is a clear indication of the exhaustion of demand from the US institutions and corporations that were the main drivers of this bull run. “

What’s next for Bitcoin?

Bitcoin threatens a correction phase in the first quarter of 2021 if institutional demand for BTC subsides.

Various institution-oriented platforms and vehicles such as Grayscale continue to see large inflows, indicating solid institutional demand. At the same time, MicroStrategy continues its policy of buying Bitcoin every bath, with the last purchase totaling $ 10 million on Friday.

“Today $ 31,000 was a bag of strong support, so at least not everyone is selling,” said Chad Steinglass, trading director at Crosstower, a digital asset capital markets firm.

“We’ll have to wait and see if this wall persists or if the institutions continue to pile up. If they do, the trend is likely to re-establish and continue. If they marginalize and wait for more regulatory guidance, then you will.” Lack of purchasing flows can be felt acutely. “

At the same time, the likelihood of a wider correction remains if the U.S. market’s appetite for BTC accumulation continues to decline overall, especially if the dollar continues to recover in 2021.