Since May 10, as much as 236,237 Bitcoin (worth $5.452 billion) has been sold by “large institutions” — mostly as a result of forced selling. Huge sell-offs from institutions seem to have been the driving force behind the drop in Bitcoin price since May, according to an analyst from Arcane Research.
In a tweet Arcane Research analyst Vetle Lunde gives details on how and when many institutional Bitcoin holders started selling their stacks. Lunde said that “it all started with Do Kwon.”
The Luna Foundation Guard (LFG) dumped 80,081 BTC in a failed effort to protect the peg of its native Terra USD (UST) stablecoin in May.
Terra’s collapse appears to have led some Bitcoin (BTC) miners to face sell pressure. Lunde claims that miners sold 19,056 coins between May and June. In some cases, miners were selling more than their monthly production, probably drawing from reserves.
Lunde claimed that as miner selling peaked, Elon Musk’s Tesla also sold 29,060 BTC by the end of Q2. Simultaneously, the Three Arrows Capital (3AC) was over-leveraged and owed lenders 18,193 BTC and coins equivalent to 22,054 BTC.
Lunde also added that a huge 24,510 BTC redemption took place at the Canadian Purpose Bitcoin exchange-traded fund (ETF) in late June, “creating further fire sale pressure in the market.” That redemption accounted for 51% of that ETF’s holdings.
In spite of the crypto markets seeing tremendous sell pressure from institutions in recent months, the Bitcoin market remains remarkably robust.
According to CoinGecko, Trading volumes have also remained higher through the 2022 market downturn compared to the peak of the 2017 bull market. On December 17, 2017, Bitcoin’s daily trading volume reached a cycle peak of $12 billion, while daily volume in July 2022 has been above $20 billion.
CEO of Singapore-based market maker Presto Labs Yongjin Kim supports Lunde by saying that liquidations from 3AC and others caused the significant price drop in June, but believes the BTC price will return to $30,000 within the next few months.
Kim claimed that it will take time for retail investors to recover their confidence in crypto after what they endured over the past few months and that institutional investments will rise again.
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