As Bitcoin (BTC) continues to tease a new all-time high (ATH), daily over-the-counter (OTC) desk inflows have plummeted to yearly lows.
Bitcoin’s “Uptober” Narrative Remains Intact
Bitcoin has overturned the sluggish start to its historically most bullish month, recording more than 13% gains in October and coming within reach of a new ATH.
The leading digital asset’s performance has restored faith in the “Uptober” narrative as it looks to record its biggest one-month gains since March 2024, when it achieved its current ATH of $73,737.
Data from crypto analytics firm CryptoQuant indicates that BTC balance with OTC desks has swelled to 416,000 – worth approximately $30 billion. In comparison, OTC desks averaged less than 200,000 BTC during Q1 2024.
For the uninitiated, OTC desks are typically used by sophisticated and seasoned investors to trade the underlying asset without impacting its spot market price. OTC trades also enable institutional investors to make trades without showing their transactions on an exchange’s trading books.
The high amount of BTC held by OTC desks allows US-based spot exchange-traded funds (ETF) to buy BTC without affecting its spot price.
How Do OTC Desk Inflows Impact Bitcoin Price?
According to data from SoSoValue, spot BTC ETFs attracted a daily total net inflow of more than $870 million on October 29. However, this figure only represents about 2% of the total BTC currently held by OTC desks.
In comparison, during Q1 2024 – when BTC made its ATH following the ETF approval – the amount of BTC purchased by spot ETFs as a proportion of OTC-held BTC reserves ranged between 9% and 12%.
Since the beginning of September, the total OTC desk balance has been stable. The 30-day change – a metric that tracks the net change in the amount of BTC held over the last 30 days – stood at 3,000 BTC in September versus 92,000 BTC in June.
The 30-day change was in negative territory during Q1 2024, indicating strong demand for accumulation from large buyers as more BTC was withdrawn from OTC desks than deposited.
Conversely, a positive 30-day change means more BTC was deposited than withdrawn, potentially signaling reduced buying interest or even selling activity.
As mentioned earlier, daily OTC desk inflows have fallen from their June highs, reaching their lowest level in 2024. A further decline in daily OTC desk inflows could propel BTC to new highs.
Data from CryptoQuant shows that OTC desks averaged close to 90,000 BTC in October, a steep decline of more than 52% compared to Q1, Q2, and Q3 2024.
Recently, Markus Thielen, head of research at 10X Research, remarked that there are “exceptionally high” chances of a crypto rally in Q4 2024.
The combination of a strong demand for BTC, coupled with limited OTC supply, holds the potential to push the crypto-asset to a new ATH. BTC trades at $72,002 at press time, down 0.7% in the past 24 hours.