Here’s how the availability of Bitcoin over-the-counter can affect the price of BTC (CryptoQuant)

Bitcoin (BTC) is seeing positive momentum that has pushed it very close to its all-time high of $73,750. The leading crypto asset was a few hundred dollars away from hitting this milestone on October 29. However, it recorded a slight correction and is currently trading at $72,200.

As crypto enthusiasts expect a new high in the coming days, CryptoQuant analysts explained the role that the availability of over-the-counter (OTC) bitcoin could play in the asset’s price trajectory. short term.

Bitcoin Rallies on ETF Demand

According to the CryptoQuant report, bitcoin’s rally is driven by increased net purchases from spot exchange-traded funds (ETFs) in the United States.

These purchases increased from a daily volume of 1,300 BTC at the start of the month to 5,800 BTC as of October 29. ETFs recorded their largest daily purchase of 7,700 BTC for this month on October 13.

Despite the increase in demand for ETFs, daily purchase volumes have yet to reach the levels seen in February and March, when investors purchased a maximum of 16,000 BTC. CryptoQuant said these lower daily purchases could address investors’ concerns that BTC is not hitting a new high amid growing demand for ETFs.

The balance of OTC offices will remain negative

In the first quarter of 2024, BTC reached record levels while asset balance growth on OTC desks remained in negative territory. The situation today is the opposite; more bitcoins are available on OTC counters than at the start of the year. Compared to a balance of 183,000-193,000 BTC in Q1 2024, there are currently around 416,000 BTC on OTC desks at the time of writing.

Due to the high availability of BTC on OTC desks, daily ETF purchases represent a smaller share of Bitcoin inventory. Total daily ETF purchases currently represent between 1% and 2% of the total BTC balance on OTC desks, compared to a 9% to 12% share recorded in the first quarter of the year. Analysts say higher demand for ETFs will be needed to reduce Bitcoin inventories on OTC desks.

On the positive side, BTC balances at OTC desks stopped growing at the rate seen in the second and third quarters due to lower inflows. The monthly growth in the total BTC balance on these desks is 3,000 BTC, compared to 77,000 BTC and 92,000 BTC in August and June.

Since BTC rallies when OTC desk balances are negative, ETF demand must increase while these desks continue to see weaker inflows for the crypto asset to record new highs.