Over the past four months, trading activity on Bitcoin's network has been plummeting. In late April, the reading was 40% less than at the peak of Bitcoin's bull market. This was partly due to prolonged price consolidation and spikes in volatility, which discouraged large investors. Much of this was due to the global crisis and hostilities in Ukraine, which contributed to a complete reorientation of the financial markets.
However, even in this situation, there is a significant increase in the number of large transactions. These are transactions where the amount of capital exceeds $10 million. Since October 2020, this indicator has increased to 40%. Although, during the bull market, the reading did not exceed 10%. The significant increase in large transactions on the Bitcoin network speaks to the growing influence of institutional traders, as well as the growing adoption of cryptocurrencies around the world. The trend for large investments in BTC emerged in 2020 when Tesla followed the example of other large companies and staged a spring bullish rally in cryptocurrency.
In 2022, it is institutional investors who make up the majority of the cryptocurrency market. However, the use of the asset was limited to short-term and medium-term profit locking, or as a 1%-5% investment portfolio as a diversification tool. The current situation is fundamentally different, as the network of the first cryptocurrency began to be used as a full-fledged springboard for large and anonymous transactions.
The key factor that influenced this was the Western sanctions against Russia, which showed the weakness of classical instruments and the ease of transaction identification. Another important event was Biden's decree to begin developing a legal framework for cryptocurrency regulation. This gave investors confidence in the protection of their rights in cryptocurrency transactions. These factors contribute to Bitcoin's significant development as an important tool in the financial world, but for the most part, it is what has increased its correlation with the stock markets.
Thanks to the growing influence of big capital, Bitcoin is becoming a more stable and predictable asset, which has a direct impact on investment. At the same time, the market is now seeing the negative effect of such co-dependence due to the Fed's policies. Soon, it will hurt the asset, as the quantitative easing program will start in May, and it will be directly reflected in the BTC/USD pair's quotes. If the asset breaks through the important $37,400-$38,100 support zone, a gradual accumulation of liquidity in the area of $32,000-$37,000 will begin until the market accumulates enough short positions for a recovery move.
That is why in the current situation investors prefer one of two things: either buying cryptocurrency for passive ownership and long-term goals or the new trend of using Bitcoin as a backup asset. SkyBridge Capital, Luna Foundation, Tesla, and MicroStrategy are already practicing this way. This suggests that cryptocurrency is beginning to adapt to the new investment environment, which may lead to a new stage of growth.