Coinbase has seen a major spike in buyer activity overnight as the price of Bitcoin (BTC) surpassed $ 32,500 on Jan. 2. Analysts say the trend was reminiscent of MicroStrategy’s Bitcoin accumulation, possibly fueled by institutional buy orders. As a result, BTC surpassed $ 31,000, reach a new record.

BTC / USD daily candle chart (Coinbase). Source: Tradingview

Coinbase’s buyers were the catalyst for the Bitcoin rally

Over the past 48 hours, Coinbase has consistently seen a high premium compared to Binance. At one point, Bitcoin was $ 100 more expensive on the exchange than on Binance.

When Bitcoin’s price surpassed $ 30,000, the premium even hit $ 350. For example, when Bitcoin was trading at $ 30,000 on Binance, BTC was priced at $ 30,350 on Coinbase.

Ahead of the rally, CryptoQuant CEO Ki Young Ju said Coinbase’s low outflows posed a risk to Bitcoin’s rally. He said flow out should increase for BTC to find new momentum, which it did. He said before the rally:

“We haven’t had a significant outflow from Coinbase since $ 23k, the transferred tokens are decreasing and the fund flow ratio for all exchanges is increasing. It is still possible for institutional investors to join soon, but if it continues we could undergo a correction. “

As Bitcoin approached $ 29,500, Coinbase outflows started to soar. Ki said it could be over-the-counter (OTC) deals, which are typically bullish for BTC and exemplify a broader trend of declining BTC reserves on exchanges.

Wealthy buyers use the OTC market to buy or sell large amounts of Bitcoin. So when the signs of OTC deals emerged, Ki said it was positive for BTC. Just two days after the outflows rose sharply, BTC soared above USD 30,000 and reached USD 31,400. Ki noted before BTC broke $ 30,000:

“$ 12,063 BTC just poured out of #Coinbase. It went to multiple cold wallets. Possible OTC deals. Breaking 30k gets tough, but settings don’t care. They just buy it more. “

Coinbase outflows. Source: CryptoQuant

Why is BTC so attractive?

According to Ashwath Balakrishnan, an analyst at Delphi Digital, Bitcoin became more attractive then it surpassed its all-time high.

When Bitcoin’s price hovered around $ 4,000, the risk of a significant downside was high, coupled with great uncertainty about the medium-term prospect of BTC.

Hence, as Bitcoin soared past $ 20,000, the dominant cryptocurrency became more attractive to investors. He said:

“Buying $ BTC post-ATH is actually superior than cutting off the bottom of a risk-adjusted lens. Up was much higher.”

In the short term, a popular story that could make the Bitcoin price higher is the prediction that institutions may not have bought BTC in December due to potential accounting issues.

As such, some analysts say more institutions could jump into Bitcoin in the first quarter of 2021. If this happens, it would be clear from Grayscale’s assets under management and the open interest of the CME Bitcoin futures market, this would likely trigger a wider BTC rally.