Since 2020, institutional investors (companies with investments of $1 million or more) have become the leading investment force for the cryptocurrency market.ETFs for spot and futures Bitcoin appeared, the number of public mining companies and investment funds increased. Even Western state pension funds did not disdain investments in Bitcoin.
Image source: BofA Global Research
This was largely the result of active printingdollars from the Fed to provide federal programs to support the population and businesses. Thus, the American crypto exchange Coinbase recorded a fourfold increase in deposits exactly for the amount of stimulus payments of $1,200 in April 2020. In those days, Bitcoin was worth $7,000.
Image source: coin base.com
In two years, more than a third of newdollars, and the Fed's balance sheet doubled to $9 trillion. Investors poured money into all sectors of the economy from real estate to cryptocurrencies, which led to inflation in the United States well above the target level.
Now, in order to cool the markets, the Fed is forced toturn its policy around 180 degrees - raise the key rate and sell part of the securities. This will inevitably lead to a fall in the value of most risky assets. Thus, the stock market (S&P500 index) has already sank by 13% since the beginning of the year.
These trends could not but affectcryptocurrency market. As a result, the net outflow of investments from cryptocurrency funds reached an all-time high of 14,327 BTC. The greatest flight is demonstrated by American investors, who reduced the volume of investments by 11% in a month.
Image source: arcane.no
Bitcoin, like the stock market, is traded in thisyear at a discount, but when adjusted for volatility, it shows a much smaller drawdown. This is due to the activity of small investors who continue to believe in the power of the coin. Thus, a group of investors with wallets from 0.1 BTC to 10 BTC doubled their positions in April alone, bringing the total stock to 2.5 million BTC.
Image source: glassnode.com
If small players were the leading force in the Bitcoin market, we would now see the price rise instead of correcting.
Image Source: Cryptocurrency Exchange StormGain
However, institutionalinvestors whose strategies are built with an eye on the actions of the Fed. It is expected that the regulator at today's meeting will raise the key rate immediately by 0.75%. The sharp rise, coupled with the planned unloading of the Fed's balance sheet, will most likely lead to an increase in the outflow of large capital from Bitcoin.
Analytical group StormGain
(platform for trading, exchanging and storing cryptocurrency)