Bitcoin price rally not likely over as institutions deplete BTC OTC supply

Bitcoin price shattered the $63,000 milestone on Wednesday with total liquidations nearing $300 million.
BTC could extend the gains to $65,000 amid expected increased demand on public exchanges.
Amid frothing FOMO, investors should exercise caution as the markets are at high risk of a correction.

Bitcoin (BTC) price could cover more ground north as the BTC wells among over-the-counter (OTC) desks run dry. This is likely to see institutions look to public exchanges, with the resulting buying pressure likely to provide tailwinds for the pioneer cryptocurrency.

Also Read: Bitcoin tags $60,000 for the first time in more than two years

Institutions deplete Bitcoin OTC supply

Bitcoin (BTC) price continues to record an impressive rally this week, breaking past two milestones, the $55,000 level on Tuesday and the $60,000 psychological level on Wednesday. The latest move has seen almost $300 million in total liquidations.

With the surge, on-chain market intelligence firm Glassnode revealed plummeting levels of BTC supply over the counter (OTC), which could compel institutions to buy Bitcoin from public exchanges. The ensuing demand pressure could send Bitcoin price above $61,000.

#Bitcoin probability of reaching $61K is high given the supply constraint on the OTC desk.

OTC desk supply is at its lowest level in 6 years which will push to buy $BTC at the public exchange.

Institutions are here for real folks! pic.twitter.com/eV4hsZOKSW
— Mikybull Crypto (@MikybullCrypto) February 28, 2024

Capital inflows from institutions remain the key driver as the wealth management industry seeks exposure via ETFs. As reported on Wednesday, the allure of BTC ETFs has surpassed that of Gold, according to Bloomberg’s Eric Balchunas, who noted that there is a decent chance that the assets under management (AUM) for Bitcoin ETFs could surpass those of Gold ETFs in less than two years.

Gold's Pain is Bitcoin ETFs' Gain in Store of Value Smackdown.. new from me on how gold being in the gutter is like the cherry on top for bitcoin fans who just got to witness the biggest ETF launch ever. Decent chance bitcoin ETFs pass gold ETFs in aum in less than 2yrs w… pic.twitter.com/rXJra1dyhF
— Eric Balchunas (@EricBalchunas) February 26, 2024

With the week recording explosive price action accentuated by strong capital inflows, the Bitcoin realized cap has experienced a near full recovery, increasing to a value of $467.2 billion. The current value is just 0.22% below the $468.3 billion peak, based on Glassnode data.

Amid the epic surge in Bitcoin price, one online analyst on X, @DaanCrypto, observed, “Bitcoin [price] has not seen a correction of more than 5%” for over a month. That is since its move above the $38,500. This shows resolve among the bulls, with investors keeping their profit-booking appetite in check.”

Bitcoin price outlook as BTC depletes over-the-counter holdings

Bitcoin price remains above the $63,000 psychological level with the potential for extended gains amid rising momentum. The odds of BTC reclaiming its $69,000 peak recorded on November 10, 2021, remain likely as BTC halving is fast approaching.

For a shot at challenging the $69,000 all-time high, Bitcoin price must break and close above $63,329, the midline of the supply zone extending from $62,905 to $65,664. As it stands, Bitcoin price is just about 10% below its peak price.

From a technical standpoint, the odds still favor the upside despite elevated risk levels of a correction seen by the overbought status indicated by the Relative Strength Index (RSI). The Spent Profit Output Ratio (SOPR) above 1 shows that the owners of the spent outputs are in profit at the time of the transaction.

The RSI inclination to the north signifies rising momentum, empowered by the strong presence of bulls in the market. This is seen with the Moving Average Convergence Divergence (MACD) and Awesome Oscillator (AO), which remain in positive territory, accentuating the bullish thesis.

BTC/USDT 1-day chart

On the other hand, the RSI position above 70 shows that BTC is already massively overbought and at high risk of a correction, especially with the SOPR position above the 1 threshold.

If the bears seize the market, Bitcoin price could retest the $55,000 milestone or extend to the $50,000 threshold.

Bitcoin, altcoins, stablecoins FAQs

What is Bitcoin?

Bitcoin is the largest cryptocurrency by market capitalization, a virtual currency designed to serve as money. This form of payment cannot be controlled by any one person, group, or entity, which eliminates the need for third-party participation during financial transactions.

What are altcoins?

Altcoins are any cryptocurrency apart from Bitcoin, but some also regard Ethereum as a non-altcoin because it is from these two cryptocurrencies that forking happens. If this is true, then Litecoin is the first altcoin, forked from the Bitcoin protocol and, therefore, an “improved” version of it.

What are stablecoins?

Stablecoins are cryptocurrencies designed to have a stable price, with their value backed by a reserve of the asset it represents. To achieve this, the value of any one stablecoin is pegged to a commodity or financial instrument, such as the US Dollar (USD), with its supply regulated by an algorithm or demand. The main goal of stablecoins is to provide an on/off-ramp for investors willing to trade and invest in cryptocurrencies. Stablecoins also allow investors to store value since cryptocurrencies, in general, are subject to volatility.

What is Bitcoin Dominance?

Bitcoin dominance is the ratio of Bitcoin's market capitalization to the total market capitalization of all cryptocurrencies combined. It provides a clear picture of Bitcoin’s interest among investors. A high BTC dominance typically happens before and during a bull run, in which investors resort to investing in relatively stable and high market capitalization cryptocurrency like Bitcoin. A drop in BTC dominance usually means that investors are moving their capital and/or profits to altcoins in a quest for higher returns, which usually triggers an explosion of altcoin rallies.

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