This unexpected signal shows that Bitcoin is on the verge of an upward trend
Bitcoin's price action has been extremely boring over the past two months as the leading cryptocurrency traded in a historically small range. However, bulls could soon get a boost as the premium between the bitcoin spot market and the implicit BTC price determined by grayscale investors has shrunk.
Bitcoin could start a bull run soon, predicts unexpected signal
According to a Bitcoin analyst, the premium between the two markets has reached below 5%. Even if this can be seen as a sign of decreasing interest, an analysis has shown that this can be interpreted differently.
According to a trader, an extremely low premium between the bitcoin price on the spot markets and the premium implied by Grayscale's confidence could indicate that the market has bottomed out. The trader in question recently wrote:
“THIS GUY WROTE AN INTERESTING THREAD ABOUT GBTC, POINTING OUT THAT THE GBTC PREMIUM ALWAYS SEEMS TO BE LOW WHEN $ BTC HAS BOTTOMED OUT. IT LOOKS LIKE IT'S TRUE. THE PREMIUM IS ALWAYS HIGHER WHEN THE MARKET IS PARABOLIC, THE PREMIUM IS LOW WHEN THE MARKET HAS BOTTOMED OUT ”.
For example, before Bitcoin rose from $ 3,000 to $ 14,000 in the first half of 2019, the premium fell to levels that were slightly above today's levels. In addition, the premium fell sharply during the corrections made in the run-up to 2017.
This recent drop in premium to multi-year lows suggests Bitcoin will soon start a bull run if history repeats itself.
Grayscale sees record inflows
Grayscale reported massive capital inflows in the second quarter. As previously reported, the company wrote in the report released last week:
“GRAYSCALE HAD ITS LARGEST QUARTERLY INFLOWS, $ 905.8 MILLION IN THE SECOND QUARTER, ALMOST DOUBLE THE PREVIOUS QUARTERLY HIGH OF $ 503.7 MILLION IN THE FIRST. FOR THE FIRST TIME, THE INFLOWS INTO GRAYSCALE PRODUCTS EXCEEDED A PERIOD OF 6 MONTHS THE $ 1 BILLION THRESHOLD ”
This report comes shortly after Paul Tudor Jones, a prominent hedge fund manager, said he is investing in Bitcoin. In a research note and interview with CNBC, the legendary macro investor said that with the advancing digitalization and central bank printing, BTC is making more and more sense.
An analyst says these Wall Street inflows are extremely bullish in the case of Bitcoin and Ethereum . The analyst recently commented:
“DEFI CAN RECOVER WITHOUT A TON OF NEW MONEY COMING IN, BUT BTC / ETH HAVE REACHED THE POINT WHERE THEY NEED REAL INSTITUTIONAL / MACRO FUND FLOWS TO ADVANCE TO THE NEXT LEVEL…”
It remains to be seen when this rally will arrive.