Bitcoin fell below $40,000 on Wednesday, but hints of fresh long-term demand boosted mood on the popular cryptocurrency following its recent meltdown.
BTC/USD climbed 2.02 percent to $38,682, having traded as high as $40,750 earlier in the day.
According to statistics released earlier this week by on-chain analytics startup Glassnode, traders are beginning to shift their coins away from exchanges and back into private wallets in order to keep bitcoin for the long term.
The net transfer volume from and to platforms – a measure of the ratio of BTC moved on versus off platforms – went negative earlier this week, showing that more traders were transferring bitcoin off exchanges to store, or ‘hodl,’ BTC in private wallets, showing increasing interest for long-term demand.
Since the start of the rout, this indicator has been positive, showing that more coins are going to rather than away from exchanges.
Long-term investors who had been picking up BTC throughout the recent fall have mostly led the purchasing, at the cost of novice traders who were over-leveraged and forced to panic sell.
Goldman Sachs (NYSE:GS) backed bitcoin as a new asset class earlier this week, citing interest from institutional investors who had progressed beyond basic queries about crypto, including BTC, to positioning queries.
“[A]sset managers and macro funds are curious in whether or not crypto fits into their portfolios, if so, how to gain access to either the physical—by trading the spot instrument on a blockchain—or exposure through other sorts of instruments, generally futures,” Goldman Sachs stated in a study.
Nonetheless, Goldman questioned if bitcoin was a legitimate store of wealth in the analysis.
“A major argument in favor of bitcoin as a store of value is its limited supply. But demand, not scarcity, drives the success of stores of value. No other store of value has a fixed supply,” Goldman said.