In a recent analysis by CryptoQuant, a renowned analytical firm, it has been revealed that the declining holdings of US institutions since April 2021 are playing a significant role in delaying Bitcoin’s entry into a bull market. The data shows that despite the recovery phase and positive on-chain cycle indicators, Bitcoin (BTC) still faces hurdles on its path to a sustained upward trend.
The report highlighted the crucial link between US institutional investors’ holdings and BTC’s price movement. Historically, the inflow of capital from US institutions has profoundly impacted Bitcoin prices, as the US dollar, the world’s reserve currency, holds considerable influence over the cryptocurrency market.
One key factor contributing to the decline in holdings is the increased regulatory pressure faced by US institutional investors. The Securities and Exchange Commission’s (SEC) regulations have created a sense of burden and hesitation among these investors, deterring them from fully embracing the crypto market. Despite BTC’s impressive 100% price surge this year, the lack of capital inflow from US institutions suggests a significant hindrance to Bitcoin’s bullish momentum.
Examining the Geographical Supply Distribution by Entities, it becomes evident that the holdings of US institutions have steadily decreased in recent months. This trend aligns with the period when Bitcoin’s recovery phase was expected to transition into a bull market. The decrease in holdings of the group holding 1K-10K BTC, which historically triggered price surges, deviates from the previously observed accumulation pattern.
Although other on-chain cycle indicators still indicate that BTC remains undervalued and has long-term accumulation potential, the lack of increased BTC holdings by the influential group of 1K-10K BTC holders poses a challenge for sustained upward momentum.
Resolving the external factors impeding US institutional investors’ participation is essential to overcome these obstacles and enter a full-fledged bull market. The regulatory landscape needs to provide clarity and a supportive framework for these investors to feel confident and secure in their crypto investments.
Until these external hurdles are addressed, Bitcoin’s journey to a sustained bull market might continue to be prolonged. However, the current situation also allows long-term investors to accumulate BTC in the undervalued range, keeping faith in its potential despite the prevailing challenges.
As the cryptocurrency market eagerly awaits developments that could positively impact the involvement of US institutions, Bitcoin’s path to a bull market remains intertwined with regulatory decisions and the confidence of institutional investors in the digital asset space.
