Almost all of Bitcoin’s trading volumes are made up of transactions worth more than $100,000. A report by blockchain analysis firm IntoTheBlock shows how billion-dollar institutional trade has dominated the token’s liquidity since 2020.
Large transactions, or trades worth over $100,000, have regularly accounted for more than 90% of Bitcoin trading volumes since 2020, according to a recent report.
This is attributed to rising institutional demand for the token, which includes new entrants to the market as well as current participants infusing additional funds. In 2020, numerous big trading houses and hedge funds acknowledged Bitcoin’s validity as a store of value, making it a pivotal year for bitcoin.
Companies such as Tesla, Block, and Paypal began investing in Bitcoin in 2020.
As a result, the average transaction size for Bitcoin has increased dramatically. According to Into The Block, the average Bitcoin transaction has been over $500,000 since August 2021, peaking at $1.2 million in November when the token achieved a new high.
Institutional interest in Bitcoin keeps rising
Despite the market’s extreme volatility in 2022, institutional interest in the token shows no signs of decreasing. According to Coinshares data, crypto markets have seen institutional capital inflows for seven weeks in a row this year.
Bain Capital has raised $560 million for a crypto fund earlier this year, while Pantera Capital has secured over $1 billion in commitments for a blockchain fund.
The belief of crypto being an uncorrelated asset class may be fading, but it does not seem to be deterring interest from traditional finance and tech institutions. The main players in crypto are evolving and there are signs that institutional demand continues to grow even if it is not reflected in prices.
-Lucas Outumuro, Head of Research at Into The Block
This raises the cryptocurrency’s stock correlation.
As a result of the trend, Bitcoin and the crypto market have begun to trade more like conventional equities. Bitcoin, for example, is down approximately 15% this year, about in line with losses in the S&P 500 and the Nasdaq indexes.
Institutional panic trading in response to the economic disruption caused by the Russia-Ukraine conflict has also been attributed to recent volatility in the crypto market.