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Data from Glassnode indicates that Bitcoin’s Over-The-Counter (OTC) holdings, a frequently overlooked element of cryptocurrency trading, have reached their peak level in the last year, with inflows consistently exceeding outflows since May 2023.
Source: Glassnode
Over-The-Counter (OTC) trading refers to the direct transfer of assets such as Bitcoin between two parties, circumventing traditional exchanges. This type of trading occurs through a decentralized dealer network and typically involves large quantities of Bitcoin.
This process is facilitated by a decentralized dealer network. In the realm of Bitcoin, OTC transactions are commonly utilized by large investors who wish to buy or sell Bitcoin without significantly affecting the market price. This is crucial, as substantial trades on public exchanges can lead to notable price volatility.
OTC holdings denote the volume of Bitcoin maintained by these OTC desks. These holdings can provide insights into the actions of major investors. For example, a rise in OTC holdings may imply that more large investors are acquiring Bitcoin through OTC transactions, potentially signaling bullish market sentiment. Conversely, a decline in OTC holdings could suggest the opposite.
Bitcoin OTC holdings
Starting the year at a local low of approximately 2,969 BTC, OTC holdings have rebounded, reaching 6,285 BTC on June 28, 2023, the highest level recorded since May 2022.
Despite this recent increase, Bitcoin OTC holdings have not yet surpassed their all-time high of 11,928 BTC, achieved on August 17, 2020. This peak coincided with Bitcoin’s highest price of $68,692 on November 10, 2021.
Source: Glassnode
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Notably, the price of Bitcoin and OTC holdings seem to be loosely correlated, with OTC holdings trailing slightly behind BTC prices. For instance, while Bitcoin has remained relatively stable since June 21, OTC holdings have risen by 12.45%, increasing from 5,244 BTC to 5,899 BTC based on a 30-day EMA. This rise occurred while Bitcoin’s price hovered around the $30k level.
Bitcoin OTC inflows
At the same time, Bitcoin OTC inflows have steadily decreased since their peak around the last Bitcoin halving in May 2020. During that period, OTC desks frequently recorded inflows exceeding 6,000 BTC. However, as reflected in the decline in holdings, 2023 has been less favorable, with inflows dropping to a 30-day EMA low of 394 BTC.
Source: Glassnode
Nevertheless, June seems to have reversed this trend, with inflows increasing to around 645 BTC, a significant decline from pre-pandemic figures.
According to Glassnode data, a comparison of OTC inflows and outflows shows a consistent surplus of inflows since May 2023. This is particularly noteworthy as the last period of excess outflows was recorded in March 2023.
Source: Glassnode
While the recent patterns in OTC holdings and inflows suggest a resurgence of market confidence in Bitcoin, the overall decline in inflows since 2020, along with OTC holdings remaining significantly below their all-time high, indicates that the market has considerable potential for growth.
These trends and metrics are important for investors and enthusiasts, acting as key indicators of whale sentiment and possible investment opportunities. Furthermore, in light of the numerous bankruptcies, lawsuits, and other regulatory challenges that have affected the crypto sector over the past year, OTC desk trades are anticipated to maintain activity as reserves are restructured or creditors are compensated.
The post Bitcoin OTC desks see highest holdings in a year as inflows rise appeared first on CryptoSlate.
