The institutional herd reaches the Bitcoin market bringing record volumes to the institutional platforms.
Bitcoin’s daily future market volume at CME and LMAX reached a new historical record on Monday. Data shows that institutional demand for Bitcoin (BTC) is increasing rapidly as major public funds continue to accumulate.
Institutional appetite for Bitcoin is increasing
According to Arcane Research analysts, LMAX Digital’s daily volume reached a record $2.62 billion.
LMAX is a tailor-made trading platform for institutional and accredited investors, unlike retail-focused platforms such as Coinbase and Binance. Arcane Research’s head of research, Bendik Norheim Schei, wrote:
„Do you want another chart that proves that institutional investors have arrived? Here is the daily volume of the institutional platform LMAX Digital. New historical maximum volume of US$2.6 billion yesterday“.
During the same period, CME’s Bitcoin future market also reached a record volume of US$2.7 billion in dollars.
At CME, traders use Bitcoin-backed contracts and as such, when the Bitcoin price increases, the value of the contracts also increases.
The massive increase in trading volume of institutional platforms occurs when funds are investing aggressively in Bitcoin.
On Monday, Anthony Scaramucci, former White House communications director, said his hedge fund, SkyBridge, entered a $300m position in Bitcoin from November 2020 to December 2020. He said:
„We at @SkyBridge entered the #bitcoin market in November/December with a position now of approximately $300 million, and today we launched a #bitcoin fund offering to accredited investors. We believe we are at the beginning of a new asset class with a great advantage. ”
With SkyBridge’s investment in Bitcoin, nine funds now hold US$23 billion in Bitcoin, according to technology researcher Kevin Rooke.
Grayscale still holds the largest amount of Bitcoin, with US$19 billion, through its main product, Grayscale Bitcoin Trust.
GBTC is an alternative to a fund traded in exhcnages in the United States where accredited institutions and investors can gain exposure to Bitcoin through a strictly regulated vehicle.
What’s coming to BTC?
Despite the massive influx of institutional capital into the Bitcoin market, the price of BTC was drastically corrected on Tuesday.
The price of Bitcoin fell more than 15% in a single day after more than $2 billion in futures contracts were liquidated.
Ki Young Ju, CEO of CryptoQuant, said derivatives traders are now uncertain and fearful, based on declining leverage at major exchanges. He said:
„This indicator is better than the Fear & Greed index. $BTC derivatives traders are uncertain about the next move and scared. ”
In the short term, this may result in a consolidation period in which Bitcoin sees less volatility after a massive upward trend.
In the last 48 hours, Bitcoin has still managed to stay above the $30,000 support level, which is an optimistic sign of positive momentum.
Whale clusters suggest that the next major support area is $29,300, which would be a crucial technical level to defend for the ongoing rally to see renewed momentum.