As bitcoin (btc) continues to spark a new all-time high (ATH), daily over-the-counter (OTC) inflows have plummeted to yearly lows.
bitcoin's 'uptober' narrative remains intact
bitcoin has reversed the slow start to its historically most bullish month, posting gains of over 13% in October and approaching a new ATH.
The performance of the leading digital asset has restored faith in the “Uptober” narrative as it looks to post its biggest monthly gains since March 2024, when it hit its current ATH of $73,737.
Data from cryptanalysis company CryptoQuant indicates that the balance of btc with OTC desks has increased to 416,000, worth approximately $30 billion. In comparison, OTC desks averaged less than 200,000 btc during the first quarter of 2024.
For the uninitiated, sophisticated and experienced investors often use OTC desks to trade the underlying asset without affecting its spot market price. OTC trading also allows institutional investors to place trades without showing their transactions on an exchange's trading books.
The large amount of btc held on OTC desks allows US-based spot exchange-traded funds (ETFs) to purchase btc without affecting its spot price.
How do over-the-counter entries affect the price of bitcoin?
According btc-spot” target=”_blank” rel=”noopener nofollow”>data From SoSoValue, btc spot ETFs attracted total daily net inflows of over $870 million on October 29. However, this figure only represents around 2% of the total btc currently held on OTC desks.
In comparison, during the first quarter of 2024, when btc reached its ATH following the approval of the ETF, the amount of btc purchased by spot ETFs as a proportion of btc reserves held by OTC ranged between 9% and 12% .
Since the beginning of September, the total OTC desk balance has remained stable. The 30-day change, a metric that tracks the net change in the amount of btc held over the last 30 days, stood at 3,000 btc in September versus 92,000 btc in June.
The 30-day exchange rate was in negative territory during the first quarter of 2024, indicating strong accumulation demand from large buyers as more btc was withdrawn from OTC tables than was deposited.
Conversely, a positive 30-day swing means that more btc was deposited than was withdrawn, which could indicate reduced buying interest or even selling activity.
As mentioned above, daily OTC table inflows have fallen from their June highs, reaching their lowest level in 2024. A further decline in daily OTC table inflows could push btc to new highs.
Data from CryptoQuant shows that OTC desks averaged close to 90,000 btc in October, a sharp drop of more than 52% compared to the first, second and third quarters of 2024.
Recently, Markus Thielen, head of research at 10X Research, commented that there are “exceptionally high” chances of a cryptocurrency rally in the fourth quarter of 2024.
The combination of strong btc demand, coupled with limited OTC supply, has the potential to push the cryptoasset to a new ATH. btc is trading at $72,002 at press time, down 0.7% in the last 24 hours.
Featured image from Unsplash.com, chart from TradingView.com
