In 2024, institutional investors have started buying Bitcoin faster than miners can produce it. For the first time since early November, demand from companies has exceeded the inflow of new coins to the market. Over the past three days, purchase volumes have outpaced daily mining output by 13%, indicating growing interest from major players in the digital asset.
Growth of Institutional Demand for Bitcoin
Despite Bitcoin's price falling more than 30% from October's highs, demand from companies is strengthening. This is because large financial institutions see potential in holding the asset long-term. As a result, demand has surpassed mining supply for the first time since November, with recent purchase volumes significantly exceeding the daily issuance of new coins.
Market Analysis and Expert Opinions
Capriole founder Charles Edwards noted that the market is under stress in the range from $126,000 down to recent lows near $80,500. According to him, there is a disruption of the so-called "corporate flywheel." This manifests in record discounts to net asset value among Bitcoin-holding companies and rising leverage, which could complicate price recovery despite the network's strong fundamentals.
Behavior of Miners and Major Holders
Bitcoin's price has corrected to around $86,600. Meanwhile, long-term holders continue accumulating the asset despite market pessimism and outflows from ETFs. Analyst GugaOnChain highlighted a divergence in market participant behavior: short-term pessimism contrasts with strategic accumulation by major players such as Michael Saylor's Strategy.
Short-Term and Long-Term Market Indicators
The Fear and Greed Index has dropped to 11, indicating extreme market fear. Nevertheless, large investors keep increasing their positions, signaling long-term growth potential. At the same time, new investors are experiencing losses as Bitcoin's price has traded below their average entry price for over a month.
Why This Matters
For miners in Russia and other countries, understanding institutional demand dynamics helps assess market prospects and potential Bitcoin price changes. Rising demand from large companies may signal future price increases despite the current downturn and high fear levels among retail investors. However, the disruption of the "corporate flywheel" and increased leverage among holders call for caution, as they may lead to heightened volatility.
What to Do?
- Monitor changes in institutional purchase volumes and Bitcoin mining output to evaluate supply and demand balance.
- Consider the current Fear and Greed Index as a market sentiment indicator but do not rely on it exclusively.
- Assess actions of major holders and strategies, such as Michael Saylor's, to understand long-term accumulation trends.
- Plan risk management strategies considering possible price fluctuations due to corporate pressure and market stress.
