We never know the OTC transaction volume under the hood by institutional investors, but there are on-chain indicators to estimate OTC deals.
And based on these indicators, large OTC deals are still going on. Potentially that institutions are continuing to buy BTC.
Thread 👇
1/ Coinbase BTC outflows
It seems massive Coinbase BTC outflow usually goes to their new cold wallet for custody that held 6000-8000 BTC. If Coinbase moves a significant amount of Bitcoins to other cold wallets, it would indicate OTC deals.
Grayscale uses Genesis Trading for buying Bitcoins, and Genesis Trading uses Coinbase OTC desk. And Ruffer just confirmed they purchased BTC via Coinbase.
2/ Fund Flow Ratio for all exchanges
Fund Flow Ratio for all exchanges is the ratio of network transaction volume of exchanges among the entire tokens transferred on the network.
If this value goes up, it implies most of the network TXs are exchange deposits/withdrawals.
Otherwise, TX volumes are coming from non-exchange wallets. Since the price is eventually determined on exchanges, massive non-exchange transaction volume is considered as a bullish signal. These transactions include OTC deals.
For now, only 5% of the network transactions are used for exchange deposits/withdrawals. This happened in Feb 2019 as well when major exchanges launched OTC desks.
3/ Tokens Transferred
Tokens Transferred is the number of Bitcoins transferred on the network. If this value goes up and the fund flow ratio for all exchanges goes down, it implies that huge OTC deals are on-going.
Bitcoin transactions are mostly used for P2P TXs(including OTC deals) and mixers/tumblers for money-laundering. That's why we need to see transactions btw non-exchange wallets.
CryptoQuant predicted the series of OTC deals with these three indicators.
1/ Whales have been active on exchanges since $19k — High Exchange Whale Ratio and Exchange Inflow Mean.
2/ I think Asian-selling would start tmr morning. There have been significant inflows to Asian exchanges.
3/ Buying power looks dried up (Fewer stablecoin deposits)
Don't get me wrong. I'm a swing trader. I believe that we're in a bullish market in the long-run but I usually take a short-term bearish when whales are active on exchanges. I'm not going to hold this position for a long time.