Bitcoin Surges 7% as Institutions Accumulate $93,000 BTC

Bitcoin’s (BTC) recent surge to $93,000 has been primarily driven by institutional investors, rather than retail exchange-traded-fund (ETF) buyers. This insight was shared by John D’Agostino, an executive from Coinbase Institutional, who highlighted that the rally began in early April. During this period, institutional investors and sovereign wealth funds quietly accumulated BTC using their "patient pools of capital," while retail investors were pulling capital from spot ETFs.

D’Agostino emphasized that institutions, sovereigns, and patient pools of capital were actively investing in Bitcoin. In contrast, retail investors were exiting through ETFs. This dynamic raises questions about what institutions might know that is driving their confidence in Bitcoin. The institutional conviction is now being formalized with the launch of Twenty One Capital, a new bitcoin investment company backed by Tether, Bitfinex, and SoftBank. The company will start with more than 42,000 BTC and is expected to trade publicly under the ticker “XXI” after merging with Cantor Equity Partners, a $200 million SPAC.

D’Agostino’s three-part thesis for this institutional interest includes de-dollarization, decoupling from tech, and hedge basket theory. De-dollarization refers to sovereigns and institutions reducing their USD exposure as trade weakens. Decoupling from tech involves Bitcoin shedding its association with tech stocks like Nvidia. Hedge basket theory positions Bitcoin as a top-five inflation hedge in models used by veteran commodities traders. D’Agostino noted that Bitcoin is trading based on its core characteristics, such as scarcity, immutability, and non-sovereign asset portability, similar to gold.

Meanwhile, major altcoins like ether (ETH), Solana’s SOL, and Cardano’s ADA have not made similar technical moves. The CoinDesk 20 (CD20), a measure of the performance of the world’s largest digital assets, is down 3% over the last month while BTC is up 7%. This recent price movement might have reignited retail interest in BTC ETFs, with data showing ETF inflow over $900 million for the second day in a row for Wednesday, putting ETF inflow over $2.2 billion between April 21 and 23. There were 9 days in this month where Bitcoin ETFs saw net outflows, totaling approximately $1.21 billion.

In summary, Bitcoin’s April rally was driven by a surge in institutional investment, while retail investors appeared to be exiting the market through ETFs. This shift in market dynamics reflects the growing role of institutions in driving asset prices and the increasing acceptance of Bitcoin as a legitimate asset class. The rally also highlights Bitcoin's status as a safe-haven asset in times of global economic uncertainty, attracting further institutional investment.