• Bitcoin has experienced a strong upswing in recent months. Data suggest that this rally is a result of mass accumulation of both retail investors and institutional players such as Square and Grayscale.
  • Square and Grayscale alone accumulated $2.3 billion worth of Bitcoin in the last quarter.
  • In relation to the ratio: Bitcoin-Miner contributed BTCs worth around $1 billion over the last quarter.

Institutions accumulate Bitcoin en mass

Bitcoin has experienced a strong recovery in recent months in the face of the worst economic situation for several decades and great uncertainty. Since the lows in March, the price of the leading crypto currency has risen by around 350%, outperforming most other macro assets.

BTC is currently traded for $15,700 – well above the 2019 highs and close to the 2018 highs. The leading crypto currency has gained 50% in the last 30 days alone, gaining momentum despite bearish news events.

This strong recovery in the price of Bitcoin System appears to be linked to the accumulation of institutions and retail investors.

Hans Hague of Ikigai Asset Management recently noted that his analysis shows that Square and Grayscale alone accumulated US$2.3 billion worth of Bitcoin in the last quarter. Grayscale is the world’s largest digital asset manager, while Square is the Fintech company that offers Bitcoin purchases to its clients via the Cash App.

To put this BTC amount into context Bitcoin-Miner have contributed approximately $1 billion worth of BTC over the last quarter. This suggests that the inflows from Grayscale and Square alone have resulted in a loss of $1.3 billion of BTC, which probably contributed to the upturn.

This does not mean that only the miners have sold their Bitcoins. There were probably many other sellers, as some were not convinced that BTC would rise in the face of a pandemic.

Liquidity crisis on the sales side

However, the purchase of Bitcoin by Grayscale and Square is only the tip of the iceberg. For example, prior to this step, crypto-asset analyst „Light“ noted that there are institutional players who are actively buying BTC:

„Much of the buying pressure that has been competing for a shortage of BTC sell-side liquidity in recent weeks comes from institutional players. They are buying from people who are in the credibility phase“.

Several news events indicate that this is the case. MicroStrategy has purchased $425 million worth of Bitcoin in the last three months, while Square has purchased $50 million for its own balance sheet. In addition, Stone Ridge Asset Management, Paul Tudor Jones‘ fund and other Wall Street players have bought the crypto-currency as investments for their customers.

Analysts believe that this accumulation will lead to a „liquidity crisis on the selling side“, with prices rising rapidly – as sellers will not sell even though more buyers are coming.