The war in Iran and soaring oil prices have roiled global stock markets this month. However, bitcoin barely moved – because large traders, institutional flows and large portfolio holders stepped in during the dips, keeping demand firm even as traditional markets faltered.
Major oil benchmarks Brent and WTI have surged 30% this month, trading above $100 a barrel early Monday. This massive rise weighed heavily on Asian stock markets and also caused downward volatility in Asian and European stocks.
However, Bitcoin rose nearly 4% to $70,200 this month, according to CoinDesk data. The market has been supported by large traders snapping up BTC over-the-counter (OTC) in a privately negotiated deal, according to Paul Howard, senior director at high-frequency trading firm and liquidity provider Wincent.
“Demand was driven by large quantities of over-the-counter products [OTC] professions, positioning for a rapid end to the conflict in Iran, but also the acquisition of MSTR. The timing, given geopolitical events, could be an indicator of the return of confidence in risk assets,” Howard said in an email to CoinDesk.
OTC desks are private trading platforms where buyers and sellers can execute large cryptocurrency transactions without going through public exchanges. Instead of placing orders on open order books, trades are negotiated directly between parties or facilitated by a broker. Large traders and institutions typically trade over-the-counter to avoid influencing the spot market price.
Howard also highlighted renewed investor interest in the popular “carry trade,” in which traders sell short (bearish bet) stocks in the strategy (MSTR) while purchasing Bitcoin ETFs at the same time. The strategy profits if BTC rises faster than MSTR falls, allowing traders to hedge risks while still benefiting from Bitcoin’s movements.
Speaking of ETFs, the 11 U.S.-listed funds saw net inflows of more than $700 million this month, according to data source SoSoValue. This is a sign of a renewed institutional appetite for cryptocurrency.
“Institutional flows have also turned favorable. Bitcoin spot exchange-traded funds have seen net inflows of around $1.7 billion since late February. This reversed a streak of outflows that lasted around four months. For the period March 8-10, flows contributed to a weekly net inflow of around $568 million,” said Vikram Subburaj, CEO of India-based exchange Giottus.
Nexo, meanwhile, pointed to Strategy’s continued Bitcoin accumulation as a major bullish factor. The Nasdaq-listed company purchased 17,994 BTC between March 2 and 8, bringing its total holding to 738,731 BTC.
The latest purchase corresponds to several days of new bitcoins entering the market.
“The network has now surpassed 20 million BTC mined, leaving less than a million coins to issue. At around 450 BTC per day, additional supply remains limited. Strategy added 17,994 BTC, which equates to around five weeks of issuance, bringing its holdings to around 3.7% of circulating supply,” Nexo analyst Iliya Kalchev told CoinDesk.
Demand was also channeled through on-chain bullish activity.
“Larger portfolios holding more than 1,000 BTC added around 0.3% to their balances during recent declines. This indicates cautious accumulation during periods of weakness,” Vikram Subburaj said.
He added that more than 400,000 BTC recently changed hands at $60,000 to $70,000.
