Cryptocurrency exchanges experienced “unprecedented” levels of Bitcoin selling during the recent 51% crash, with institutional traders blamed, according to investigative company Chainalysis. A recent blog post by the company shows that cryptocurrency exchanges experienced their “biggest ever Bitcoin inflows” between March 9 and March 13, with 70% of those moves being transfers of between ₿10 and ₿10,000, showing conclusively than panic selling by whales was heavily responsible.
Institutional Traders the Cause
There were various theories as to why the Bitcoin price collapsed the way it did last week, with institutional investors blamed for playing their part in the collapse, as well as the after effect of the global stock market crash and the collapse of the BitMEX margin trading platform as the price was going down.
Chainalysis is in no doubt however, saying that “professional traders and investors were responsible for the majority of the activity”, although whether they have been able to differentiate between genuine institutional traders and the PlusToken scammers, who shifted ₿13,000 around the same time.
Image courtesy of Chainalysis
Movement Clearly With the Intention of Selling
However it is sliced up, the increased movement was clearly done to sell:
Since March 9, exchanges received a total of 1.1 million bitcoin over eight days, peaking at 319,000 bitcoin on March 13, compared to an average of 52,000 bitcoin per day prior to March 9 since the start of the year.
These numbers may be large, and clearly indicative of a wish to sell in the near term, but despite being 712,000 more than usual during this time period, “this represents just 5% of available bitcoin (all mined bitcoin minus all lost bitcoin)” according to Chanalysis. This means that the other 95% of Bitcoin in existence is being held by those not wishing to sell.
Selling Pressure Over for Now
Chainalysis estimates that ₿40,000 and ₿240,000 remains on exchanges and could therefore be sold, but they also state that these fears have been eased for now:
…the majority of excess bitcoin arriving at exchanges has been sold, and the worst of the oversupply appears to be finished for now.
This may be the case for now, but should the global situation worsen, or Bitcoin drop down to previously low levels, there is no discounting the possibility that this remaining Bitcoin will be sold off.