Bitcoin price at $10,000, Guggenheim believes - here's what the data says

There it is again, the institutional FUD. And again, it’s Guggenheim CIO Scott Minerd wrapping himself in the bear fur. Yet over-the-counter bitcoin transfers are at record levels. How does this fit together?

Scott Minerd can’t quite make up his mind: The chief investment officer (CIO) of asset manager Guggenheim has once again issued a “forecast” on the bitcoin price – sounding increasingly bearish. Speaking to US television station CNBC last Friday, Minerd mimicked the bitcoin bear. He sees the market in the process of a massive correction that could more than halve the bitcoin price once again.

When we look at the history of crypto and we see where we are, [I really believe] this is probably a crash. And you know a crash would mean we’re down 70-80%, which would mean [a bitcoin price] between 10 and 15 thousand,

Minerd told CNBC. Consequently, the asset manager recommends speculating on a falling bitcoin price.

Let’s put it this way, I wouldn’t be in a hurry to buy bitcoin and I don’t see any reason to own it right now. If you want to be a speculator, speculate that it will go down,

that’s Minerd’s investment advice.

It’s a scoundrel who thinks that the institutional investor wants to conjure up a more favorable entry price in Bitcoin with his black and red painting, respectively. On the one hand, this is supported by the fact that the Guggenheim CIO only put forward the thesis of the “true Bitcoin bottom” at USD 15,000 in mid-June, but did not want to shelve his bullish long-term outlook of a Bitcoin price of up to USD 600,000.

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In addition, Guggenheim filed a new fund with the US Securities and Exchange Commission in early June. The application explicitly mentions possible investments in Bitcoin and Co.

The fund may seek investment exposure to cryptocurrencies (particularly Bitcoin), often referred to as “virtual currency” or “digital currency,” […

Admittedly, derivatives are also part of the contemplated crypto exposure of the proposed Guggenheim fund. In other words: not only direct investments, but also bets on falling prices by means of futures and other investment vehicles are to be kept open.

Against this background, Minerd’s statements should be taken with a grain of salt. In particular, the statement that the Guggenheim CIO sees “no reason” to buy Bitcoin at the moment clashes with six-figure price scenarios that he bhe same rumor was circulated as early as December 2020.

Is the Bitcoin crash coming? This is what the data says

The bare numbers provide only limited support for Minerd’s thesis of another crash. His argument seems to be based solely on the fact that the bitcoin price has crashed more in the past than it did during its last plunge from its all-time high at around $64,000. Compared to that, BTC has lost about 50 percent at its current price of 34,000. Consequently, should the past repeat itself, there would still be room to the downside. Meanwhile, some of the on-chain data collected by Cryptoquant also speak for increased selling pressure from the side.

For example, the number of BTC held in the wallets of crypto derivatives exchanges remains at a high level of over 1.3 million BTC. Tendentially, an increase in this metric means that more BTC is being held for selling, buying altcoins, and margin trading.

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Bitcoin price at $10,000, Guggenheim believes - here's what the data saysBitcoin reserve of derivatives exchanges (left BTC, right Bitcoin price). Source: Cryptoquant.

In terms of “whale transactions” on Bitcoin exchanges, it also looks at first glance like a selling sentiment among institutional investor:s. For example, the relative size of the top 10 bitcoin transactions to total inflows on exchange wallets posted a sharp swing north today, July 11. As can be seen from Cryptoquant’s chart, such spikes in this metric, known as the “Whale Ratio,” have more often resulted in a correction in recent months.

Bitcoin price at $10,000, Guggenheim believes - here's what the data saysExchange Whale Ratio, calculated by Cryptoquant

Selling pressure with simultaneous accumulation?

Now, the crypto space and the traditional investment business have one thing in common: the really big deals are often done off the order books, off-exchange. And this is where a metric from Cryptoquant makes you sit up and take notice. The “Fund Flow Ratio” describes the ratio of bitcoin transactions associated with exchange wallets to the total number of BTC transfers registered on the blockchain during the same period. A low value means high activity in over the counter (OTC) trading. There is definitely bullish news from this front. The Fund Flow Ratio befThe fund flow ratio is at its lowest level since data collection began about a year ago.

Bitcoin price at $10,000, Guggenheim believes - here's what the data saysFund flow ratio at all-time low. Source: Cryptoquant

There is nothing stopping “institutional” investors from simultaneously parking bitcoin on Exchanges and buying in off-exchange in parallel. This is something to keep in mind whenever an “insti” once again predicts the demise of crypto land. DYOR should remain the top priority.

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