The Great Bitcoin Exodus: A Closer Look
Since May 10, a staggering 236,237 Bitcoin (BTC) worth approximately $5.452 billion has been sold off by large institutions. This isn’t a case of enthusiastic investors cashing in; rather, much of this selling was forced, driven by a series of unfortunate events that began with the infamous Do Kwon.
How Do Kwon Sparked the Fire
According to Arcane Research analyst Vetle Lunde, the selling frenzy was ignited when The Luna Foundation Guard (LFG) made a desperate move to protect the TerraUSD Classic (USTC) stablecoin. In May, they dumped an eye-watering 80,081 BTC, marking the beginning of a tumultuous period for institutional Bitcoin holders.
Miners in Distress: The Selling Dilemma
As if the situation couldn’t get worse, Bitcoin miners felt the squeeze too. Reports indicate that miners sold off 19,056 BTC between May and June. Some even resorted to selling more than they were able to produce monthly, tapping into their reserves. It was a Bitcoin buffet, but the portions were slim!
The Ripple Effect: Companies Joining the Sell-Off
Miners weren’t the only ones feeling the pressure. Elon Musk’s Tesla, not one to miss out on a market moment, sold 29,060 BTC by the end of Q2. On top of that, the over-leveraged Three Arrows Capital (3AC) found themselves owing lenders 18,193 BTC with other crypto debts amounting to 22,054 BTC.
ETF Drama: A Sudden Surge in Redemptions
A particularly dramatic turn came in late June when a massive redemption of 24,510 BTC occurred at the Canadian Purpose Bitcoin ETF. This enormous sell-off constituted a hefty 51% of the ETF’s holdings, creating further sell pressure within an already jittery market.
The Resilient Bitcoin Market: An Unexpected Survival
Amidst all this chaos, the Bitcoin market has shown remarkable resilience. Although institutional selling has rained down upon it, daily trading volumes have surged higher throughout 2022 compared to the peak of the 2017 bull market. For perspective, Bitcoin’s daily trading volume hit around $12 billion on December 17, 2017, but July 2022 saw numbers consistently above $20 billion according to CoinGecko.
What’s Next? Predicting the Market’s Future
Yongjin Kim, CEO of Singapore-based Presto Labs, suggests that all these liquidations have pushed Bitcoin prices below their fundamental equilibrium, predicting a rise back to $30,000 in the near future. However, he warns that regaining investor confidence, especially among retail buyers, will take time. “The retail sentiment is completely broken,” he noted, hinting at slow recovery ahead.
A Choppy Horizon Awaits
In Lunde’s final thoughts, he expressed optimism that the forced selling and contagion fears may be behind us. But don’t get too comfortable just yet. According to him, the market could experience a series of ups and downs in the near term: “We will likely slump, pump, and dump in choppy conditions,” he cautioned.
