Bitcoin price surge helped by growing institutional involvement

The Bitcoin price has pushed through $8000, yet with market manipulation an ongoing worry, have we seen enough to believe this is the beginning of a wider bullish shift?

Bitcoin breaks out of its downtrend

Bitcoin has finally broken out of its downtrend amid a huge recovery that has seen the price ramp up in a parabolic manner over the course of the past week. With 30% of gains over the course of the first two days of this week, fear of missing out (FOMO) appears to be kicking in big time. However, the big question is whether this rally can be trusted.

Institutional investors aid Bitcoin surge

One element to note is that institutional investors seem to be playing an increasingly active part in this move; a shift which provides greater confidence given the doubts over the source of buying in the past. There are claims that some of the buying is coming from market manipulation, but the Grayscale Bitcoin Trust (GBTC) provides us with some idea of the kind of money that is moving into the crypto posterchild. The GBTC is a Bitcoin only closed-end fund worth over $1.5 billion, where only qualified accredited investors with a minimum investment of $50,000 can buy in. We can see below that the fund has exhibited a sharp increase in Bitcoins added as a result of rising institutional demand over recent weeks.

Converted into the relevant dollar value ($58 million), we can see that the April buying pressure is almost equivalent to December 2017. That month was the height of the Bitcoin rally, exhibiting both the greatest monthly rise and all-time high of $19,763. To see that same kind of inflows in April where we seemed to have been just getting started with this rally is certainly a sign of confidence.

Another way we can point towards real buying place is at the CME, with the Chicago exchange seeing a record high volume of trades taking place yesterday. Of course, this is one place that we would expect all transactions to hold credibility and so the CME is able to add credence to the notion that we are seeing a huge surge in volumes.

The weekly chart below highlights the recent ramp up in price, with the price moving through $7315 resistance this week. This is the first swing high to have been taken out since the uptrend came to a dramatic end back in late 2017. Certainly the $8481 swing high carries more value, and traders will be watching closely how the price reacts to that next hurdle.

The four-hour chart highlights the surge that we are currently within, following a retracement on Sunday. The $84.81 resistance level up ahead is worth noting as a potential point for another retracement to come into play. However, unless we see a break below $6771, such a pullback would be deemed as a short-term move and a precursor to further gains.

IGA, may distribute information/research produced by its respective foreign affiliates within the IG Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the research is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, IGA accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact IGA at 6390 5118 for matters arising from, or in connection with the information distributed.

The information/research herein is prepared by IG Asia Pte Ltd (IGA) and its foreign affiliated companies (collectively known as the IG Group) and is intended for general circulation only. It does not take into account the specific investment objectives, financial situation, or particular needs of any particular person. You should take into account your specific investment objectives, financial situation, and particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit.

Please see important Research Disclaimer.

Cryptocurrency trading

Trade CFDs on cryptocurrencies with IG.

  • No need to own any cryptocurrency
  • Trade on bitcoin, ether, ripple, litecoin, EOS, NEO and Stellar pairs
  • Trade on markets that are both rising and falling

Live prices on most popular markets

  • Forex
  • Shares
  • Indices
Sell
Buy
Updated
Change
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Sell
Buy
Updated
Change

Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.

Sell
Buy
Updated
Change
-
-
-
-
-
-
-
-
-
-
-
-
China 300
-
-
-
-

Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 20 mins.

The Momentum Report

Get the week’s momentum report sent directly to your inbox every Monday for FREE. The Week Ahead gives you a full calendar of upcoming key events to monitor in the coming week, as well as commentary and insight from our expert analysts on the major indices to watch.

For more info on how we might use your data, see our privacy notice and access policy and privacy webpage.

You might be interested in…

Find out what charges your trades could incur with our transparent fee structure.

Discover why so many clients choose us, and what makes us a world-leading provider of CFDs.

Stay on top of upcoming market-moving events with our customisable economic calendar.