Large financial institutions continue adding Bitcoin to their coffers, even after BTC price rallied 21% in the past week.
Bitcoin (BTC) price has rallied by 21% over the past 7 days, reaching $52,000 for the first time since December 2021. The price surge is mainly attributed to the growing inflow into spot Bitcoin exchange-traded funds (ETF) reaching a peak of $631.3 million on Feb. 13. Traders are speculating whether over-the-counter (OTC) desks have depleted their coin reserves, leading them to resort to spot buying on regular exchanges and creating an unbalanced situation favoring bullish momentum.
While such a hypothesis is easy to believe and somewhat misleading, on-chain data from Glassnode shows a decrease in short-term holders' supply, and if conditions are sustained, Bitcoin price could rally above $55,000.
It's essential to dispel the misconception that arbitrage desks are always net long (buyers), which implies that they have directional exposure to the price. While having a significant spot market position is crucial for their business, it is often hedged using derivative contracts. Similarly, not every OTC deal requires a buyer and seller, as intermediaries can turn to spot exchanges' order books and futures contracts to fulfill requests. In short, whether the arbitrage desk has a 'buffer' to immediately transfer coins or not does not alter the price dynamic.
