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CryptoQuant CEO: Bitcoin Downtrend Not Caused by Grayscale Selling

A prominent crypto analyst has dismissed the notion that Grayscale’s recent Bitcoin selling is behind the market slump, arguing that the derivatives market is the main driver of the price action.

Ki Young Ju, the CEO and founder of on-chain analytics firm CryptoQuant, shared his views on the state of the Bitcoin market in a new post on X, a social media platform for crypto enthusiasts. He urged his followers to “accumulate Bitcoin like an institutional investor”, citing strong on-chain indicators that suggest a bullish outlook.

According to Ki, Bitcoin’s price decline from above $60,000 to below $40,000 in the past month is not due to spot selling from Grayscale Bitcoin Trust (GBTC), the largest institutional holder of the cryptocurrency. GBTC has been making significant outflows since the approval of the Bitcoin spot ETFs in the US, leading some to speculate that the fund is dumping its holdings to avoid losing its premium.

However, Ki claims that Bitcoin is in a “futures-driven market”, where the price is mainly influenced by the leverage and sentiment of the traders on the derivatives platforms. He points out that the over-the-counter (OTC) markets, where large investors buy and sell Bitcoin directly, are very active, but have no price impact.

Ki also notes that the re-accumulation phase, where institutional investors buy the dip and increase their exposure to Bitcoin, is nearing completion. He says that this phase will end when the on-chain OTC and spot ETF activities decrease, signaling the start of a new bull market.

Ki’s analysis is based on various on-chain metrics that he and his team at CryptoQuant monitor, such as the exchange inflow and outflow, the net unrealized profit and loss, the stablecoin supply ratio, and the all exchanges reserve. These metrics provide insights into the supply and demand dynamics of the Bitcoin market, as well as the behavior and sentiment of the investors.

Ki is not the only one who believes that Bitcoin’s downtrend is temporary and that a new rally is imminent. Many other analysts and experts have expressed similar views, citing factors such as the adoption of Bitcoin as legal tender in El Salvador, the growing interest from institutional and retail investors, the innovation in the Bitcoin ecosystem, and the limited supply of the cryptocurrency.

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