Analysts warn of ‘institutional fatigue’ with Bitcoin price back under $ 32K

The price of Bitcoin (BTC) recovered in the last two days after falling to as low as $ 28,850. Following the rapid rebound, however, BTC has been unable to cut past heavy resistance at $ 33,000 on January 23, withdrawing below $ 32,000 at the time of writing.

1-hour BTC / USD (Coinbase) price chart. Source: TradingView.com

Coinbase’s premium return is bullish, but what now?

Earlier, when the price of Bitcoin began to fall below $ 32,000, BTC traded much lower on Coinbase than on Binance.

The lack of a premium on Coinbase caused concern for two key reasons. First, Bitcoin naturally trades higher on Coinbase due to Tether’s minor premium.

Second, when Coinbase sees a lower price than other exchanges, it indicates high sales pressure in the US market.

As the selling pressure on Bitcoin begins to increase in the US market, BTC’s price feels steep in a short space of time.

BTC / USD premium index (white) versus Coinbase (blue). Source: CryptoQuant

But, almost immediately after BTC rebounded at $ 30,000, Coinbase’s premium reappeared. At the time of writing, BTC was around $ 40 higher on Coinbase than on Binance.

The Coinbase premium reappearing after almost 12 hours is a positive sign of a potential trend reversal.

Signs of “organizational fatigue”

Everyone is far from bullish in the near term, however. Analysts at QCP Capital, a team of traders in Asia, see several signs of “organizational fatigue.”

Given that the main narrative around the recent past has been the institutional demand for Bitcoin coming from the US, the rally may be at risk if the institutional appetite for BTC slows. They are He said:

“Signs of organizational fatigue: We have done a time zone analysis that breaks down BTC’s movements into Asia hours versus US hours (12 hours each). Since March last year, the clear pattern has been relentless buying in the United States while Asian whales and miners have been on the offer. ”

Bitcoin is losing strength in the US era. Source: QCP Capital

The traders emulated that the strength in the US trading session had lost momentum for the first time.

In fact, throughout the past week, most of the BTC sales pressure came from Asia. This marks a key shift in market sentiment. They added:

“However after the BTC 2 weeks ago, the strength in US hours has lost momentum for the first time. This is a clear indication of demand fatigue from US institutions and corporations that have been the main drivers of this bull run. ”

What comes next for Bitcoin?

Bitcoin is at risk of corrective action throughout the first quarter of 2021 if institutional demand for BTC subsides.

Various institutional-focused platforms and vehicles, such as Grayscale, continue to see large inflows, indicative of strong organizational demand. At the same time, MicroStrategy is continuing its policy of buying Bitcoin on every dip with the latest purchase on Friday totaling $ 10 million.

“Today, $ 31,000 was a pocket of strong support, so at least not everyone is selling,” said Chad Steinglass, head of trading at Crosstower, a digital asset capital markets firm.

“We’ll have to wait to see if that wall stays, or if organizations continue to build up. If they do, the trend is likely to re-establish itself and continue. If they do move to the outskirts awaiting more regulatory guidance, then their lack of purchasing flow will be severely felt. “

At the same time, the likelihood of a broader correction remains if the US market continues to see a general decline in the desire to accrue BTC, especially if the dollar continues to recover in 2021.