Bitcoin, the largest cryptocurrency suffered major limelight into extreme fear territory not seen since the COVID-19 crash. The worst trading day came on 12 May, when BTC slumped from just over $30,000 to its lowest price position since late December 2020 at $25,300.
Despite the increased selling pressure, things might be cooling down. Here’s why:
Any entry points?
Institutional investors have played a vital role in supporting Bitcoin over the years. Despite price volatility, investors have found opportunities to accumulate tokens according to CryptoQuant CEO Ki Young Ju. As per the executive, ‘institutional investors are buying BTC via market makers right now.’
Q. Are institutional investors selling #Bitcoin?
A. They're buying $BTC via market makers right now.
Here's what happened last week ?
— Ki Young Ju 주기영 (@ki_young_ju) May 16, 2022
Major crypto exchanges over the past week witnessed coin movements as echoed here by Ki Young Ju. “Market makers” who used the Gemini exchange sent around 84,000 BTC to Binance from 7 to 10 May, hitting an all-time high. Here’s a graphical representation:
Source: CryptoQuant
He added that the majority of selling pressure came from Coinbase as they had the largest BTC inflows from Binance. BTC/USD spot trading volume on Coinbase hit a yearly high while the Coinbase Premium tapped a three-year low of -3%.
Considering the BTC-USD order book heat-map for Coinbase below, one could see ‘pretty thick bid walls’ embedded since the latest bear market in May 2021.
Source: Tradingview
Market makers had already sent around $2.5 billion worth of bitcoin to exchanges last week, adding:
“Not sure they finished selling, but it is highly likely for the accumulation from institutions since Coinbase digested the majority of selling pressure.”
Ki Young Ju summarized that “institutions tried to stack BTC from $30k but had to rebuild the bid walls at 25k due to the unexpected LFG selling.”
Supporting the cause
Following this development, the exchange reserves metric showcased a bullish narrative as well. A decline in this metric would imply a decline in the selling pressure.
Source: Glassnode
In addition, as per Cryptoquant, some technical factors painted a similar picture. Relative Strength Index (RSI) for instance. At press time, stood less than the 30 benchmarks which signified an “oversold” scenario. If this comes to be, BTC might have a chance of reversing its fall and starting a new rally.
In fact, BTC did showcase a 1% recovery as it tried to surpass the $30k resistance.
