Institutional Money Drives Bitcoin Recovery

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The price of Bitcoin has lifted from recent floors, with analysts saying the return of institutional investors is behind raised demand.

"Bitcoin experienced significant market activity and rose above the $57,000 mark due to institutional confidence. The cryptocurrency was driven by substantial inflows into U.S. spot Bitcoin ETFs," says George Khoury, Global Head of Education and Research at CFI.

Bitcoin quotes at $58780 in midweek trade (£45,882.28£45,882.28), having been as low as $54296 on Monday.

Khoury says institutional demand was centred on BlackRock’s IBIT, noting the fund attracted $187.21 million in new investments.

Bitcoin ETFs have recorded two consecutive days of strong inflows in a row after a period of uncertainty and the price declines of the last few weeks.

"The inflows could help stabilise the price of the asset to a certain extent, although it could remain exposed to the downside," says Khoury.

Headwinds to BTC arise from the German government, which continues to sell its BTC holdings at a rapid pace.

"Traders could continue to monitor BTC movements between the German government’s addresses and crypto exchanges in order to determine the risks of new selling pressures. The return of $200 million worth of bitcoin from exchanges to the German government wallet relieved some concerns that the assets could hit the market although the relief could be temporary. The German government continues to hold more than $1 billion worth of cryptocurrency," says Khoury.

Police in the eastern German state of Saxony seized nearly 50K bitcoins in mid-January, worth about $2.2BN at the time of the seizure.

Even after a raft of sales in recent weeks, Germany’s Federal Criminal Police Office still holds roughly 32,488 bitcoins — worth around $1.9 billion at today’s prices.

Meanwhile, the Mt. Gox bankruptcy estate has begun making repayments in bitcoin and bitcoin cash to some of the former clients of the defunct exchange who were victims of a hack, as per guidance issued last month.

Administrators of Mt. Gox look set to release some 142K bitcoins in the coming months, which could pose headwinds to the market if recipients opt to sell.