Institutions increase holdings by 577,000 BTC; why short-term fluctuations can't change the long-term trend

Over the past year, institutional attitudes toward Bitcoin speak volumes through numbers: an increase of 577,000 BTC, worth approximately $53 billion. This is no small figure. CryptoQuant founder Ki Young Ju pointed out today that this continuous inflow of funds indicates that institutional demand remains strong, even as the market recently experienced volatility with the sentiment index falling below the neutral line.

A True Reflection of Institutional Demand

$53 billion configuration signal

According to on-chain data from CryptoQuant, institutions added a total of 577,000 BTC over the past year. At the current price of $92,764, this equates to a sustained inflow of about $53.7 billion. The significance of this number lies in the fact that it reflects not short-term speculation, but the genuine actions of institutional investors in long-term asset allocation.

How to Measure Institutional Demand

Ki Young Ju specifically explained the method for measuring institutional demand: U.S. custodial wallets typically hold between 100 and 1,000 BTC each. After excluding exchange and miner addresses, this metric can serve as a rough reference for institutional demand, with ETF holdings also included.

What does this mean? It indicates that institutions are not frequently trading on exchanges but are holding Bitcoin in long-term custody wallets. This behavior generally signifies more stable, long-term investment intentions.

Short-term Volatility and Long-term Trends

Recent Market Sentiment Fluctuations

It’s important to note that while institutional demand remains strong, the Bitcoin market has recently experienced noticeable short-term volatility. According to relevant data, on January 19, Bitcoin’s advanced sentiment index plummeted from the extreme bullish zone of 80% to 44.9%, falling below the 50% neutral threshold. Meanwhile, one-hour forced liquidations exceeded $205 million, a typical “liquidation crash” scenario.

Two Levels of Market Participants

Here’s an interesting phenomenon: large whales have become cautious, while medium-sized holders are driving most exchange activity. Additionally, Bitcoin futures open interest has increased by nearly 13% since the beginning of the year, rising from $54 billion to over $61 billion, reflecting a slow return of risk appetite.

In other words, different participants in the market are doing different things. Short-term traders are experiencing emotional swings and leverage liquidations, but institutional investors continue to allocate.

What Does This Mean

The sustained institutional demand carries several important implications:

• Long-term Support: The continuous inflow of $53 billion provides Bitcoin with a relatively stable demand base, which is uncommon in the crypto asset space.
• Market Maturity: Large-scale institutional participation marks a shift of Bitcoin from pure speculation toward institutional asset allocation.
• Context of Volatility: Short-term sentiment swings and leverage liquidations occur within a broader environment of ongoing institutional allocation, which changes the nature of these fluctuations.

Summary

The figure of 577,000 BTC added by institutions over the past year signals a clear long-term trend: a stable, large-scale demand force is continuously operating in the Bitcoin market. Recent market volatility, while eye-catching, occurs against the backdrop of this larger institutional allocation trend. Short-term sentiment index drops and leverage liquidations are normal market fluctuations, but they do not alter the long-term allocation direction of institutional investors. For those seeking to understand the Bitcoin market, grasping the distinction between these two levels—short-term trading volatility and long-term institutional allocation—may be more important than tracking every price movement.