The Current Bitcoin (BTC) Price Rally Lacks Retail Involvement
In a June 18 tweet, the Chicago Mercantile Exchange (CME) noted the rising interest in Bitcoin Futures from institutions. The CME illustrated this phenomenon by highlighting its June 17 trading volumes. On that day, open interest in BTC futures spiked to an all-time high of 26,555 BTC or 5,311 contracts. At press time, this totaled to over $246 million.
“CME Bitcoin futures (BTC) shows growing signs of institutional interest. BTC open interest rose by a record 643 contracts in a single day, establishing a new all-time high of 5,311 contracts on June 17.”
Capital Pumps Behind Bitcoin (BTC) Resurgence
Alex Kruger, a trader, economist, and crypto-analyst could not agree more. He says that the current price pump has hints of systematic buying. He noted that the price action was probably being caused by a pooled strategy to purchase Bitcoin in large volumes. If it were retail driven like its former 2017 BTC bull run, the huge capital pumping the BTC market cap by huge figures in a matter of days would be absent.
In 2017, at the height of the Bitcoin fever, FOMO drove investors to Google. As the king of crypto broke all barriers and shot towards the $20,000 value, the retail market’s reaction was to search for more information on it. Google Trends shows that Bitcoin Google searches were number two on the worldwide news list. Pundits speculate that the price of Bitcoin is highly correlated to its Google search tends. Whenever there is an uptick in searches, something is afoot in the retail market.
In like manner, a Willy Woo study done in 2017, says that Google search trends
can be utilized to detect speculative buyer bubbles too. They can also inform
on the worst of times to buy and the best of times to sell as well. For
instance, when the Bitcoin search volume is low, it is deemed as the best time
to purchase the digital asset. A trader stands to gain a maximum financial
increase in such moments.
The Correlation Between Retail Involvement and Google Search
When the search volume is abnormally
high, there is a probable BTC bubble, and the prices are about to pull back.
SEMrush also agrees with the correlation between BTC price and Google search
data. The SEO and online visibility platform say that Bitcoin searches were
over 1,258 percent during the 2017 Bull Run. In December 2017, for instance,
users hit the Google search button 17 times more than they did for the USD.
The SEO platform also notes that the digital asset’s prices moved at par with its search volumes with a correlation coefficient of 95 percent. In contrast, in the current BTC Bull Run however, Bitcoin Google data searches are at 10 percent of what was in 2017. This is a significant pointer that the retail FOMO has not commenced yet. It also could imply that once the retail investor catches on, the price of Bitcoin could go higher than has ever been.
JP Morgan Chase has also made a report to the effect that BTC investing has changed thanks to an influx of institutional interest. Nikolaos Panigirtzoglou, the M.D of global market strategy, says that:
“The overstatement of trading volumes by cryptocurrency exchanges, and by implication the understatement of the importance of listed futures, suggests that market structure has likely changed considerably since the previous spike in Bitcoin prices in end-2017 with a greater influence from institutional investors,”