Bitcoin on pause – Institutions not buying

According to the Greyscale Bitcoin Trust, institutions are not buying currently. The premium is showing at negative 16.55%, meaning that in spite of bitcoin being so cheap to buy by way of the fund, institutions are holding back, perhaps waiting for a re-continuation of the recent upward trend. 

Many indicators are looking good for bitcoin. The price has been holding above $40,000 for the last two weeks, the daily Stochastic RSI indicator is bottoming out, the 50-day moving average is rising steadily back towards a golden cross of the 200-day, and a month-long trend line is acting as strong support. 

However, after the rally took bitcoin back to $48,000, it was met with very strong resistance that was tested over 4 days, before bitcoin came back down to its present price level of around $44,500. 

The $44,000 level is very key for bitcoin to hold. Should the number one cryptocurrency drop this level, it can go down further to test $42,000 and $40,000 levels of support. 

The Greyscale BTC premium being at negative 16.56% does appear to be an area of concern though. Institutions use the Greyscale Bitcoin Trust to buy their bitcoin, given that it’s an extremely well-regulated and safe way to gain exposure to the number one cryptocurrency. 

If they buy now then there is a 16.56% discount on the shares that they buy – a potentially huge discount margin should bitcoin maintain its growth to the upside. As can be seen in the chart, Ether is also at a discount of nearly 11%, and ETC (Ethereum Classic) is at a negative premium of over 30%. 

Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.