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A message from Morph

Having teased a record high, bitcoin traded within a fairly narrow range. BTC fluctuated between $71,150 and $72,500 after climbing to just under $73,000 at around 23:00 UTC on Tuesday. The cryptocurrency rose to over $73,500 during the U.S. afternoon on Tuesday. The broader digital asset market is also muted, having gained just under 0.9% in the last 24 hours, with ETH rising about 1.15% and SOL falling by over 2.5%.

Spot bitcoin ETFs recorded their third-highest inflows on Tuesday, adding more than $870 million. Total trading volumes crossed $4.75 billion — the highest since March — with BlackRock's IBIT accounting for $3.3 billion alone. Bloomberg ETF analyst Eric Balchunas said he expects bigger inflow figures in the coming days. “$IBIT traded $3.3b today, biggest number in 6mo, which is a bit odd bc btc was up 4% (typically ETF volume spikes in a downturn/crisis),” Balchunas wrote on X. “Occasionally tho volume can spike if there a FOMO-ing frenzy. Given the surge in price past few days, my guess is this is latter, which means look for big inflows this week.”

The Bhutan government, which holds over $900 million worth of bitcoin, moved a chunk of its holdings to exchanges on Tuesday, sparking speculation that it is on the verge of selling some of its stash in a move that may weigh on market prices. Bhutan’s BTC movements are part of a broader trend of profit-taking among whales as the cryptocurrency's price approaches the record high set in March. As more holders move into profit and look to lock in gains, their market activity may slow the climb toward the record, CoinDesk research noted earlier this month. Even though realized profit in bitcoin peaked on Oct. 8 and has started to slow down, which is a positive development, there remains higher profit-taking than the yearly average.

As bitcoin approaches a record high, sophisticated investors appear to be taking steps to trade without influencing the price in the spot market.

Over-the-counter (OTC) desks now hold 416,000 BTC ($30 billion) compared with an average of less than 200,000 BTC during the first quarter, according to CryptoQuant data.

OTC desks are primarily used by institutions or high-net-worth individuals who prefer to avoid having their transactions appear on crypto exchange order books, allowing them to transact large quantities without affecting the market price. The growing flow to OTC firms is one reason the bitcoin price has been trending in a sideways channel for the past seven months.

If bitcoin wants to go higher this cycle, daily inflows into OTC desks need to start reducing, which is what is being observed currently. Daily inflows into OTC desks have declined to the lowest levels in 2024. CryptoQuant notes that in October, OTC desks averaged around 90k bitcoin, a reduction of 52% compared to the January-September period of 189k bitcoin.