Since May 10, no less than 236,237 Bitcoins (worth $5.452 billion) have been sold by “large institutions” – mostly as a result of forced sales.
A Twitter thread from Arcane Research analyst Vetle Lunde details how and when many institutional Bitcoin holders started selling their stacks. Lunde said “it all started with Do Kwon”.
The Luna Foundation Guard (LFG), which controlled Terra project funds, dumped 80,081 BTC in an unsuccessful effort to protect the peg of its native Terra USD (UST) stablecoin in May.
The collapse of Terra seems to have made Bitcoin (BTC) miners face selling pressure. Lunde estimates that miners sold 19,056 coins between May and June. In some cases, miners were selling more than their monthly payments production, probably drawing on reserves.
The Luna Foundation Guard (LFG), which controlled Terra project funds, dumped 80,081 BTC in an unsuccessful effort to protect the peg of its native Terra USD (UST) stablecoin in May.
Terra’s collapse appears to have put pressure on some Bitcoin miners to sell. Lunde estimates that miners sold 19,056 coins between May and June. In some cases, miners were selling more than their monthly payments production, probably drawing on reserves.
Lunde noted that when miner sales peaked, Elon Musk’s Tesla also press the red button and sold 29,060 BTC at the end of the second quarter. At the same time, crypto Three Arrows Capital (3AC) the investment firm was overleveraged and owed the lenders 18,193 BTC and coins equivalent to 22,054 BTC.
Lunde also added that a massive redemption of 24,510 BTC took place at the Canadian Purpose Bitcoin exchange-traded fund (ETF) in late June, “creating additional fire selling pressure in the market.” This redemption represented 51% of the assets of this ETF.
BTC market growth
Although crypto markets have come under tremendous selling pressure from institutions in recent months, the Bitcoin market remains remarkably resilient.
Trading volumes also remained higher during the 2022 market downturn compared to the 2017 bull market peak. while the daily volume in July 2022 exceeded $20 billion. according at CoinGecko.
The CEO of Singapore-based market maker Presto Labs, Yongjin Kim, agreed with Lunde that the liquidations of 3AC and others caused the significant price drop in June, but believes the price of BTC will return to 30,000 dollars in the coming months.
He told Cointelegraph on July 21 that “these sell-offs have pushed the price of Bitcoin below the fundamental equilibrium price,” leading him to believe that prices will return “to $30,000 in the next few months.”
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Kim added that it will take time for retail investors to regain their confidence in crypto after what they have endured over the past few months and that institutional investments will rise again.
“I think retailer sentiment is completely shattered, so it will take some time to restore confidence in the market. But there will be some turnaround by the end of this year to thwart sell-offs.
Lunde concluded his thread by stating:
“I tend to lean towards hard selling and contagion uncertainty at the moment. We are likely to crash, pump and dump in choppy conditions in the period ahead.”