Bitcoin may have crashed 50% in a single day in March, but this hasn’t stopped traders from investing in the cryptocurrency. In fact, a number of data sources suggest that a majority of investors are starting to load up on their BTC positions, despite the uncertainty in the global economy.
Bitcoin Investors Are Buying At a Rapid Clip
According to screenshots of crypto-enabled retail brokerages based in the U.K. shared by trader Nik Patel, users of these platforms are long on Bitcoin. In fact, for IG.com is signaling that 78% of client accounts are long on the cryptocurrency.
Three of the most prominent retail brokers in the UK pic.twitter.com/kIvSpcvemG
— Nik Patel (@cointradernik) April 4, 2020
This isn’t the only evidence suggesting that the majority of crypto market participants are leaning long.
Qiao Wang of Messari, a former institutional trader, recently shared the below chart, which shows the Bitcoin order book for Coinbase Pro.
BTC order book… While I'm short-term cautious due to macro conditions, it can't get any more long-term bullish than this: pic.twitter.com/snq8ISFMCF
— Qiao Wang (@QWQiao) April 2, 2020
Although not representative of other exchanges, it is clear that there are more traders bidding the foremost crypto than selling it, with there existing nearly 24,000 BTC worth of orders down to an order price of $2,000 and a mere 4,000 BTC worth of orders up to $12,000. Wang wrote that “it can’t get any more long-term bullish than this,” referencing the data.
Sign Of An Imminent Reversal?
While the strong buy interest in Bitcoin suggests further upside is imminent, it may be a sign of bad things to come for the cryptocurrency market.
A big narrative pushed by prominent traders in both traditional markets and the crypto industry is that going against the majority, going against the grain is often the correct trade to make. Think back to the age-old Warren Buffett quote that goes: “[be] fearful when others are greedy and greedy when others are fearful.”
This quote seemingly applies to the crypto market: In December 2018, after Bitcoin had plunged 50% within a month, there were countless analysts calling for the cryptocurrency to return to $1,000, with some even predicting a return to $800.
But, as soon as these predictions went mainstream, gaining popularity on social media forums, Bitcoin reversed, heading higher towards $4,000 instead of establishing new lows.
The same trend was seen when Bitcoin breached $14,000 in the middle of 2019, with the asset returning to a bear market rather than exploding to a fresh all-time high.
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