After a rapid market recovery, Bitcoin appears to be losing its upward momentum, hitting resistance as it approaches the $40,000 mark, but no two major news events have been able to propel it past it.
At the time of writing, BTC is trading at $37,663, moving sideways over a relatively short time frame. Over the longer timeframe, this crypto asset, which is the highest by market cap, has seen corrections of 13.6% and 24.6% in the 7-day and monthly charts, respectively.
This was one of the most brutal sell-offs in BTC, a correction that caused the price of bitcoin to drop from roughly from $60,000 to its current level. Most believe it was caused by a tweet from Tesla CEO Elon Musk stating that Bitcoin’s carbon emissions were too high.
While that event was the catalyst, on-chain data suggests otherwise.
A report by Arcane Research shows that daily spot trading volume for bitcoin reached an all-time high on May 19.
The study estimates that bitcoin traded around $35 billion during that period, a figure that suggests spot traders played a significant role in the sell-off.
Arcane Research added, “The record volume was driven by massive selling during the market crash, but whales were buying, with Coinbase alone handling nearly 2 million transactions on May 19.”
As analyst william clemente points out, most of the selling has been done by spot buyers, who have reaped the rewards of this bull cycle in bitcoin.
Between December 2020 and April 2021, the average price of bitcoin was $35,000, $45,000 and $60,000, respectively.
Who is behind the bitcoin sale?
Analyst ben lilly provides a more detailed analysis of the sell-off, noting that giant whales, miners and other market movers were the driving forces behind the event. A “trio” of these players, especially the whales, contributed to what happened the other day.
The analyst used on-chain data to demonstrate that the increase in the number of accumulated addresses had a negative reaction on the price of bitcoin, a metric that has been rising since February 8. As the analyst put it, it wasn’t until May that the total balance accumulated “stalled.
Ben Lilly also showed some evidence that some of the giant whale holdings grew during the sell-off, while some declined. The chart below shows that on Feb. 1, there were 550,000 addresses with between 1,000 and 10,000 btc, and as of May 24, those addresses were around 100,000.
The analyst noted, “Wallets that have accumulated huge amounts are no longer accumulating, wallets that once held huge amounts are selling off, and some slightly smaller wallets are sucking up the chips. With over time, this is not sustainable in terms of price. It takes huge wallets to drive demand to get higher prices. “
Ben Lilly noted that, among other things, miners began “spending bitcoin” on May 11, and from May 11 to May 16, miner sales increased. According to this data, the analyst said, “It’s important to look at the price on May 11 because that’s when the sell-off really started.”
JarvisLabs noted on May 23 that ByteTree’s data on miners (the best reliable source of miners’ spending and power generation) pointed out that for the past few weeks again, their spending exceeded their output.
So what happened over the weekend has actually been building for months, and there is also the factor of “market movers” “knocking down” the price of bitcoin when critical support is needed.
Ben Lilly outlined it as follows: “Now, it all boils down to the fact that the giant whales have been selling for a while, and the miners started selling before Musk’s tweet and the whale sale, while some of the sharks (market movers) shorted the market, which along with the giant whale and miner sell-off caused the market to weaken.”
Posted by:CoinYuppie，Reprinted with attribution to:https://coinyuppie.com/who-is-really-driving-this-record-decline-in-bitcoin/
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