May 16, 2022

Research: Bitcoin’s $6K Monday Crash Wasn’t Driven By Institutional Investors

2 min read

Recent information indicated that mid-tier traders took revenues prior to and during the other day’s enormous price drops for bitcoin and Ethereum. Furthermore, it challenged the assumptions that whales and institutional financiers have dealt with their BTC holdings.

Mid-Level BTC Holders Took Profits Amid The Drop

Following the highly positive first days of 2020 in which bitcoin exploded above $30,000 to a new all-time high of almost $35,000, the cryptocurrency backtracked greatly yesterday. As CryptoPotato reported, BTC went from over $33,500 to an intraday low of underneath $28,000 (on Bitstamp) in hours.

Concurrently, the second-largest cryptocurrency by market cap was flying to its new near 3-year high at $1,170 prior to it went through a comparable sharp rate correction to listed below $900.

According to info from the analytics company Santiment, the so-called “mid-tier holders” took this chance to gather short-term revenues during these rate developments. These are addresses consisting of between 10-1,000 bitcoins and 100-10,000 ETH.

As the charts below show, the number of such BTC wallets had actually stopped by over 1,100 in the previous week, while the ETH wallets with that quantity had decreased by 523.

Bitcoin Whales/Mid-Tier Holders. Source: Santiment
Bitcoin Whales/Mid-Tier Holders. Source: Santiment Ethereum Whales/Mid-Tier Holders. Source: Santiment likewise refuted the claims that whales and institutional investors with massive BTC and ETH positions have actually started to get rid of their digital assets. On the other hand, the company highlighted that BTC addresses with over 1,000 tokens and ETH wallets with 10,000 or more coins had actually increased by 51 and 17, respectively, in the past week.

Analysts Agree With The Profit-taking Theory

Jason Deane, an expert at the cryptocurrency advisory company Quantum Economics, supported the narrative discussed above in a CNBC interview.

He laid out the growing demand from institutions towards bitcoin. Those consisted of huge buy from insurance coverage giant MassMutual, hedge fund supervisors One River Asset Management and Ruffer Investment, and the Wall Street behemoth Guggenheim Partners.

Consequently, he thinks that “any correction will be temporary,” given the “present belief and appetite for bitcoin.”

“The most likely description for the pullback is brief term profit taking by traders, instead of long-lasting investors.”– he concluded.

Bitpanda’s CEO, Eric Demuth, included that “there’s no rejecting that bitcoin has proven itself as an established and top-performing property. Bitcoin’s value grew over 300% last year as more institutional investors took that leap to accept digital currencies.”