Major FUD has ensued in the crypto market after Bitcoin (BTC) showing a very high volatility dipping twice under $35,000 levels within a week’s time. This comes amid China announcing a major crackdown on Bitcoin miners.
This sharp 15% correction has caused Bitcoin (BTC) to lose more than $100 billion of its valuations in no time. Of course, the tremors are felt across the crypto market which is down by 13% as of press time.
However, as it happens during every market correction, Bitcoins move from the weak hands to the strong ones. After systematically liquidating their holding until the first market crash on May 17, The Bitcoin whales have turned the tide and are buying the dips. Chainlaysis chief economist Philip Gradwell spots the clear trend reversal. However, the liquidations have been higher than the accumulation as of now.
Also, Gradwell points out the rate of Bitcoin deposits at exchanges has slowed down during the Friday (May 21) crash, compared to the market crash earlier on Wednesday, May 19. During Wednesday’s price crash, the BTC exchange deposits were at a six-time high.
Bitcoin inflows to exchanges remain high compared to the last 180 days, but not past sell-offs. Inflows by the end of the day on 19 May reached 271k bitcoin, but were only 65k bitcoin by 14:00 UTC today. pic.twitter.com/AN1sMQlLub
— Philip Gradwell (@philip_gradwell) May 21, 2021
Huge Panic Among Short-Term Bitcoin Investors
When investing in markets, experience is the biggest teacher! This is clearly seen with short-term investors booking major losses. As Glassnode reports major selling has been done by short-term investors who bought in the last few months.
— Yann & Jan (@Negentropic_) May 21, 2021
Strong liquidations in the Bitcoin futures market were also witnessed during the recent price correction. Just over the last few hours over $7.5 billion of Bitcoin futures open interest were liquidated.
This weeks correction has resulted in a substantial deleveraging of futures markets.
Over $7.5B in #Bitcoin open interest was cleared within a few hours, bringing total open interest back to levels last seen in early February.
— glassnode (@glassnode) May 21, 2021
Well, the big news is that the recent market volatility hasn’t perturbed big institutional players. Post the recent crash, Geminin exchange CEO Tyler Winklevoss tweeted that institutions continue buying the dips. As CoinGape reported, there were large OTC deals taking place at Coinbase with BTC supply moving out off exchanges.
It will be interesting to see how BTC moves from here. Whether it enters a consolidation or strong recovery.