Inflows of just $93m are enough to move the value of the currency by 1%, according to a memo by Bank of America which also dubbed Bitcoin is an excessive commodity.
The observation suggests that bigger investors have a clear path to market manipulation. In the note, Bank of America strategist Francisco Blanch specifically explains that “Bitcoin is extremely sensitive to increased dollar demand”.
Blanch then went on to compare Bitcoin to a rival asset, gold. According to Blanch it would take $2bn worth of inflows to make a dent in the pricing of gold or $2.25bn to sway the price of a 20-year-plus treasury bond. So, Bitcoin can be manipulated more easily, it seems.
“We estimate a net inflow into Bitcoin of just $93m would result in price appreciation of 1%”, the memo reads. Since Bitcoin's market cap is just 10% of gold's, Bitcoin seems twice as volatile as gold when it comes to per-dollar inflows.
The bank noted that whales were holding onto their Bitcoin and that none has actually sold any of their BTC wealth. This includes Tesla, the car manufacturer that bought $1.5bn worth of Bitcoin earlier this year.
Even more interestingly, some 78% of all Bitcoin supply is illiquid which may be good for replacing gold – up to a point – as a storage unit for wealth, but definitely makes the currency more volatile.
Glassnode said that some 95% of BTC traded last moved on-chain in the past three months, meaning that big addresses are holding on to the currency.
This has not stopped people from opting for Bitcoin for the purposes of entertainment, though. Casinos such as Bitcasino.io, 1xBit and FortuneJack have all been happy to extend various BTC bonuses and more!