The Iran war and soaring oil prices have rocked global stock markets this month. However Bitcoin Little changed – as large traders, institutional flows and large wallet holders stepped in during the dip, keeping demand firm even as traditional markets faltered.
Major oil benchmarks Brent and West Texas Intermediate have soared 30% this month, trading above $100 a barrel early Monday. The sharp surge put heavy pressure on Asian stock markets and also caused downward volatility in Asian and European stock markets.
However, Bitcoin has risen nearly 4% this month to $70,200, according to CoinDesk. Paul Howard, senior director at high-frequency trading firm and liquidity provider Wincent, said that the market was supported by large traders snapping up BTC in over-the-counter (OTC) transactions through private negotiations.
“Demand was driven by some large over-the-counter transactions [OTC] transactions, preparing for a swift end to the Iran conflict, and the acquisition of MSTR. The timing could be an indicator of renewed confidence in risk assets as geopolitical events unfold,” Howard said in an email to CoinDesk.
OTC desks are private trading venues where buyers and sellers can execute large cryptocurrency trades without going through a public exchange. Instead of placing orders on an open order book, trades are negotiated directly between the parties or facilitated by brokers. Large traders and institutions often conduct over-the-counter transactions to avoid affecting spot market prices.
Howard also highlighted investor interest in the popular “carry trade,” in which traders short (bearish bet) strategy (MSTR) stocks while simultaneously buying Bitcoin ETFs. This strategy will profit if BTC rises faster than MSTR falls, allowing traders to hedge their risk while still benefiting from Bitcoin’s movements.
Speaking of ETFs, 11 U.S.-listed funds saw net inflows of more than $700 million this month, according to data source SoSoValue. This is a sign of renewed institutional interest in cryptocurrencies.
Vikram Subburaj, CEO of Giotus Exchange in India, said: “Institutional fund flows have also turned supportive. Spot Bitcoin exchange-traded funds have seen net inflows of approximately $1.7 billion since the end of February. This reverses a trend of outflows that lasted about four months. Between March 8 and 10, fund flows contributed to weekly net inflows of approximately $568 million.”
Meanwhile, Nexo points to Strategy’s continued accumulation of Bitcoin as a major bullish factor. The Nasdaq-listed company purchased 17,994 BTC between March 2 and 8, bringing its total holdings to 738,731 BTC.
The latest purchases are equivalent to the value of new Bitcoin entering the market in just a few days.
Nexo analyst Iliya Kalchev told CoinDesk: “The network has currently mined over 20 million BTC, with less than 1 million tokens to be issued. At approximately 450 BTC per day, incremental supply remains limited. Strategy added 17,994 BTC, equivalent to approximately five weeks of issuance, bringing its holdings to approximately 3.7% of the circulating supply.”
Demand is also pouring in via bullish on-chain activity.
Vikram Subburaj said: “During the recent decline, balances of large wallets holding more than 1,000 BTC increased by approximately 0.3%. This indicates the need for cautious accumulation during periods of weakness.”
He added that more than 400,000 BTC recently changed hands at prices between $60,000 and $70,000.
