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Institutional Interest in Bitcoin Continues to Rise, Pushing BTC Above $50K – What's Next?

Bitcoin’s price has rallied bullishly these past few days, touching $55,000 and retracing shortly after. For the moment it has managed to keep most of its gains.

Analysts have turned to the influx of major institutional investors as an explanation for Bitcoin’s price gains. Recently, Meitu – the Chinese tech company that has established an application geared towards beauty and image editing – announced that it too has joined large-scale financial institutions in backing Bitcoin. The software firm purchased $22.1 million worth of Ethereum (ETH) and $17.9 million worth of Bitcoin (BTC). Paolo Ardoino, CTO at Bitfinex, shared with Blockchain.news:

“Meitu’s purchase of Bitcoin and Ethereum could see more businesses in Asia joining the likes of Tesla and MicroStrategy in adding cryptocurrencies to their balance sheets. This may signal the maturing of crypto in Asia and spark further retail interest across the region.”

He added that in addition to this, Meitu embracing blockchain technology could lead to a boost in cryptocurrency adoption in Asia. Ardoino said:

“Meitu’s plan to integrate blockchain technology into their businesses could lead to even more innovation in crypto and ultimately boost mass adoption in Asia, especially within the region’s emerging markets.”

Bitcoin’s recent market capitalization recently crossed $1 trillion once again. This illustrates a growing demand from institutional investors, as more major companies have been allocating a portion of their balance sheet to Bitcoin.

With the rise in interest in Bitcoin and cryptocurrencies, what is to be expected of the safe-haven asset in the upcoming days?

Bitcoin (BTC) Price Analysis

Source: BTC/USD 4-Hour via TradingView

Bitcoin (BTC) soared higher, reaching $55,855 earlier today. At the time of writing, the price of BTC has pulled back and is trading at $53,522. Currently, the bulls are trying their best to defend the critical level of $54,000.

Bitcoin is currently trading at a price well above $52,000 and the 20-day Exponential Moving Average of $52,145.

If BTC/USD continues to maintain its upward momentum and bulls are able to maintain the price above $54,000, traders will focus on the first upward price target of $56,000. Any further increase may likely result in the price being pushed past the resistance level of $58,000, Bitcoin’s all-time high.

From the four-hour candlestick graph, we can see that Bitcoin rose above the $50,000 resistance zone yesterday. The digital asset touched $52,000, successfully breaking through the neckline of the inverse head and shoulder pattern illustrated above. The neckline is $52,079.

What investors should be aware of is that the breakthrough of the inverted head and shoulders pattern is not always smooth. Generally speaking, it will take more time for digital assets to break through the right shoulder. Successful breakthroughs of the neckline area will also always be accompanied by a rapid increase in trading volume.

However, when looking at Bitcoin, there is no notable increase in trading volume happening at the moment. BTC/USD currency pair may undergo a price correction and retest the previous resistance level of $52,078.

When looking at technical indicators, we can see that the moving average convergence divergence (MACD) line is gaining momentum, indicating that BTC is still in the bullish zone.

So despite the likelihood of a retracement for Bitcoin, the digital asset will likely still uphold above $52,000, which is its current support level.

Ethereum Battles Resistance as Exchange Inflow Volume Drops

Ethereum, the world’s second-largest cryptocurrency by market capitalization is seeing consistent resistance in its bid to reclaim the $2,000 psychological price level.

According to CoinMarketCap, Ethereum joins Bitcoin in initiating a slight dip in the crypto market. Ether is currently trading at $1,814.79, down 1.03% in the past 24 hours after parring off some of its losses in the early hours of the day.

The resistant battle of Ethereum is however not backed by some on-chain metrics. As outlined by Glassnode, Ethereum Exchange Inflow Volume (7d MA) just reached a 1-month low of 15,477.056 ETH, showing the lack of momentum in a push by market bears to liquidate their Ethereum holdings. While the metrics are silent on where the bulk of the Ether in circulation is going, Decentralized Finance (DeFi) data provider, DeFi Pulse reveals that the total ETH locked in smart contracts surged from 8.745 million on March 17, up to 9.226 million today March 19th.

With the bulk of Ethereum going into smart contracts, a new position has been ascertained, noting that Ethereum’s high gas fee woes are not a factor in preventing holders from taking advantage of the other benefits the network offers.

Meitu scoops up more Ethereum than BTC

The Ethereum market is also not showing off the impact of Meitu scooping up more ETH than Bitcoin in its recent purchase. Blockchain.news reported earlier that the Chinese software firm allocated $50 million into crypto, with the bulk of the funds invested in Ethereum.

The clamour for the positive future prospects of Ethereum is growing by the day as the crypto space anticipates the implementation of the EIP 1559 upgrade, as well as the long haul to the full migration to Ethereum 2.0 – the proposed Proof-of-Stake model that will help secure the system more and provide the needed scalability.

Meitu Invests Another $10 Million in Bitcoin

Meitu, a Chinese app developing company specializing in photo-editing and video processing software, has announced another purchase of Bitcoin.

The Chinese software firm purchased an additional 175.6 Bitcoins for $10 million, bringing its total BTC reserve to over 940 coins.

Since the beginning of March, Meitu has invested $100 million in Bitcoin and Ether and is one of the latest major institutional company to adopt a cryptocurrency investment strategy.

The Hong-Kong Stock Exchange-listed firm, along with many institutional firms such as Square, Tesla, and MicroStrategy, have turned to cryptocurrencies to diversify their asset allocation plans during the pandemic, a move that has greatly served to bolster Bitcoin’s growth. Meitu also possesses Ether and has invested approximately the same amount in both Bitcoin and Ethereum.

The company stated that its crypto purchases were “a demonstration to investors and stakeholders that the Group has the vision and determination to embrace technological evolution” and prepare for a “foray into the blockchain industry.”

At the time being, Meitu holds 31,000 ETH and 940 BTC.

Previously, the app developing firm said that it was considering integrating blockchain technology into its business using Ethereum-based dapps. Ethereum has been rapidly gaining traction in the cryptocurrency industry, with most decentralized finance applications leveraging the blockchain network to operate.

With Ethereum recently recording a new all-time high at $2,150, billionaire investor Mark Cuban has remarked that Ethereum’s growth may “dwarf” Bitcoin’s in the long run. He attributed Ethereum’s dominance in the long-term to the extensive list of smart contracts and extensions running on Ethereum.

Beauty App Meitu’s Crypto Holdings Evaporated Up to $50m in H1

Meitu, a Hong Kong-listed (1357.HK) beauty app company known for its AI-driven photo-editing and video-sharing solutions, recorded a net loss between $41.1 million and $52.3 million in the first half of this year amid the bloodbath experienced by the crypto market.

In a filing proposed to the Hong Kong Stock Exchange last Friday, the firm acknowledged that “the expected increase in net loss is primarily due to the acquired cryptocurrencies impairment”. Per the report:

“It is expected that the group may record a net loss of between approximately RMB 274.9 million and RMB 349.9 million for the six months ended June 30, 2022.”

Meitu acquired nearly 940.89 Bitcoin (BTC) and 31,000 ether (ETH) between March 7 and April 8, 2021, at approximately $49.5 million and $50.5 million, respectively, but these holdings remained without selling.

The filing also reads:

“Since the cryptocurrencies acquisitions, the group has neither acquired nor sold any cryptocurrencies pursuant to the Cryptocurrency Investment Plan (including any Ether or Bitcoin).”

“As of June 30, 2022, the fair values of the Acquired Ether and the Acquired Bitcoin determined based on the then prevailing market prices were approximately US$32.0 million and US$18.0 million, respectively,” the report added.

Subject to the devaluation amid the recent crypto winter, the loss is estimated at about 50%, and the book loss is as high as $50 million compared with the previous purchase price.

The Chinese Xiamen-based beauty app pointed out that the crypto market was volatile in the near term because prices were subject to fluctuations.

The meltdown in the cryptocurrency market has been heightened by tightened macroeconomic factors and unforeseen circumstances like the invasion of Ukraine by Russia and the collapse of UST and LUNA tokens.

As a result, Bitcoin has shed at least 70% of its value from the all-time high (ATH) price of $69,000 recorded in November 2021.

Furthermore, the non-fungible token (NFT) sector has also not been spared because sales recently slipped to a 12-month low.