The last few weeks have been difficult within the crypto world. Well, after several months of continuous rise in the price of Bitcoin, with only some specific setbacks, the price of the main cryptocurrency in the world collapsed. And with it, the entire crypto market did, generating panic in investors and despair among crypto users. However, the latest figures from Grayscale show that institutional investors are buying Bitcoin again.
A strong collapse in Bitcoin
Despite the fact that several days have passed since then, the crypto world is still not recovering from the collapse in the price of Bitcoin. And it is that, after maintaining a record of continuous growth for several months, and when it was hovering around its historical maximum price, the price of BTC collapsed. Going in a matter of hours from $ 57,718 per Bitcoin to $ 31,248.
The price of Bitcoin collapsed in mid-May. Source: CoinDesk
Behind this collapse were on the one hand Elon Musk and his company Tesla. And, after strongly supporting Bitcoin and the crypto world beginning to accept BTC in exchange for their vehicles, Musk decided to suspend this option due to the environmental damage caused by cryptocurrency mining. While on the other hand was the Chinese government, and the tightening of internal measures to avoid transactions with cryptocurrencies.
These two events were enough to suddenly deflate the confidence that had been building in the cryptocurrency market. Causing investors to abandon the Bitcoin market en masse, causing the crypto asset’s price to collapse, and leading analysts to wonder if BTC will ever be able to regain the confidence of institutional investors. Main momentum of the last big Bitcoin rally.
Institutional investors return to Bitcoin
However, and to the relief of the crypto community, these fears appear to have been rushed. Well, in the last installment of the Glassnode newsletter, the analytical firm would have revealed an increase in the inflow of institutional capital to the cryptocurrency market. Which could lead to a further increase in the price of BTC in the short or medium term.
This conclusion was reached after analyzing the Grayscale Premium. This would be the amount that, above the market price of Bitcoin, institutional investors are willing to acquire shares in the company’s BTC fund. That is, when Grayscale is able to sell its Bitcoin shares for a price higher than the market price, we know that there is a significant demand for them, as well as optimism about the future of their price. Whereas if the shares are sold at a discount, the opposite occurs.
In this case, since March Grayscale’s premium had been declining, selling the shares at a discount of up to -21.23% on the market price. However, and after the price collapse of a few weeks ago, this figure has quickly recovered to -3.8%. Still discounted, but clearly a major improvement in demand for Bitcoin, likely by investors trying to take advantage of the low prices in the crypto market.
Institutional investors buy back Bitcoin as the Grayscale premium shows. Source: Glassnode