Hedge Funds Recommend Buying Bitcoin And Ethereum

Bitcoin bears have made yet another unsuccessful attempt to push through the $33,000 support this week. The bulls swiftly took over the initiative and managed to take the BTC/USD rate back above the $34,000 mark. It should be noted that the recent bearish activity was the fourth attempt in a month to test the psychological barrier of $ 30,000. However, the sellers couldn't gain a foothold even below $32,000.

Interestingly, all this time, when the BTC market was moving in the range of $31,000-37,000, institutional investors did not even think of getting rid of their accumulated cryptocurrency capital. Instead, they were actively building up their long positions. The total number of Bitcoin addresses with balances from 100 BTC to 10,000 BTC has been growing steadily for two and a half weeks. Large investors ignore even the fact that the NVT indicator, a tool for identifying bubbles in the cryptocurrency market, indicates the persistent bearish sentiment.

Moreover, there is also evidence that the number of bitcoins on exchanges has been declining for several weeks in a row. For some, this may seem like yet another signal suggesting to get rid of BTC. But it's not that simple. Most experts believe that the decline in bitcoins in exchange wallets is a bullish sign, meaning funds are being withdrawn for safe storage in cold wallets. On the contrary, if the amount of BTC in hot wallets grows, this is a sure indication that investors want to either sell them or convert to another digital currency.

A similar situation is observed with ETH. The number of addresses holding 1,000-100,000 ETH not only didn't decrease during a period of high volatility but even demonstrated some insignificant growth. The NVT indicator for Ethereum shows bearish sentiment too but the supply of Ethereum on cryptocurrency exchanges has remained practically unchanged lately.

Institutional investors seem to expect further growth in BTC and ETH. Purpose Investments, for instance, took advantage of the latest decline in cryptocurrencies to build up their long positions in BTC and ETH. The company has acquired 100 BTC, bringing their BTC holdings to 19,508 BTC, and bought 574 ETH - now the fund manages 54,520 ETH. Cathie Wood's ARK Invest has also boosted its BTC holdings, buying 18,746 shares of the Grayscale Bitcoin Investment Trust (OTC:GBTC) and 13,718 shares of the Coinbase (NASDAQ:COIN) cryptocurrency exchange. To recap, ARK Innovation ETF (NYSE:ARKK) manages 7.44 million GBTC shares and 799,799 Coinbase shares, ARK Next Generation Internet ETF (NYSE:ARKW) owns 3.13 million Coinbase shares. Considering the above, we recommend relying on the experience of hedge fund managers and using corrective sentiment to build up your long positions in BTC and ETH.