Bitcoin is no longer the magic internet money that it’s long been branded. There are no dark forces causing it to behave the opposite of traditional markets. There are just a lot of freaks and weirdos, disenfranchised idealists, citizens of countries with untrustworthy central banks, doing things that traditional investors think are crazy.
On March 12, when the World Health Organization announced the coronavirus (COVID-19) pandemic the crypto market had crashed. People started to see what bitcoin really was. Some of the largest companies in the world, including Apple and Tesla, to local bars and restaurants, the price of the S&P 500 and other global markets collapsed by 10%, taking bitcoin with it. Bitcoin, the digital asset that had come to be identified with its non-correlation, was broken, many warned, and if it was correlated with traditional markets its use and value were gone.
The crypto community was sure, that the cause of the crypto market’s sudden collapse was the announcement regarding the Coronavirus pandemic.
The sale of 281,000 Bitcoins
In an article published by Coinmetrics on March 17, on-chain data supported the fact that short-term BTC holders were most likely responsible for the selling rather than new holders.
The figures they quoted included 281,000 BTC was on the move after 30 days of holding, compared to 4,131 that hadn’t been touched for over a year before being moved.
This data might suggest to some that it was weak hands that FOMO bought in during Bitcoin’s 30% price rise at the beginning of 2020. However, one has to consider the possible motives at play for such a large amount of Bitcoin being sold off cheap.
There is a very real possibility that the same people responsible for Bitcoin’s price rise this year, were the same people responsible for its fall.
Why would miners crash the market?
Let’s see aa few reasons that would make sense for larger miners to crash the market:
- To liquidate leveraged competitors (many smaller miners hedge on leverage platforms);
- To increase their market share ahead of the halving (because of the above);
- To shake out big manipulators (like Institutional investors) prior to the halving.
We’ll never really know whether or not the above scenarios are true because of the selloff. But these two reasons are ‘powerful’ enough to be the cause of the crypto market’s crash.
If you want to learn more, visit BIDITEX page and ask your questions, follow us on Twitter, Facebook, Medium, Telegram, LinkedIn. Bid your space with BIDITEX.
Is the sale of 281.000 BTC the cause of the Bitcoin’s latest crash? was originally published in Data Driven Investor on Medium, where people are continuing the conversation by highlighting and responding to this story.