Data Analysis: Who Is Driving Bitcoin's Record Fall?

After a swift market recovery, Bitcoin appeared to be losing its upward momentum, hitting resistance near the $40,000 mark, but no two major news events could push it above.

At the time of writing, BTC is trading at $37,663, moving sideways over a shorter period of time. On longer time frames, the top crypto asset by market capitalization has corrected 13.6% and 24.6% on 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 $60,000 to its current level. Most believe this was sparked by Tesla CEO Elon Musk’s tweet pointing out that Bitcoin’s carbon emissions are too high.

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While the event was a catalyst, on-chain data suggests otherwise. According to a report from Arcane Research, Bitcoin’s daily spot trading volume reached an all-time high on May 19.

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The study estimated that bitcoin traded around $35 billion during the period, a figure that suggests spot traders played a significant role in the sell-off.

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Arcane Research added: “The reason for the record volume is that there was a lot of selling when the market crashed, but whales were buying, with Coinbase alone processing nearly 2 million transactions on May 19.”

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As noted by analyst William Clemente, much of the selling has been by spot buyers who have harvested Bitcoin during this bull cycle. Between December 2020 and April 2021, the average price of Bitcoin is $35,000, $45,000, and $60,000.

Who Is Behind the Bitcoin Sale?

Analyst ben lilly analyzed the sell-off in more detail, pointing out that whales, miners and other market movers were behind the event. The "trios" of these characters, especially the behavior of the giant whale contributed to what happened the other day.

The analyst used on-chain data to demonstrate that an increase in the number of cumulative addresses had a negative reaction to Bitcoin’s price, a metric that has been rising since February 8. As the analyst put it, the total balance accumulated did not "stall" until May.

Therefore, the data shows that these bitcoins are "changing hands". Ben Lilly also presents some evidence that some whales' holdings grew during the sell-off, while some decreased. The figure below shows that on February 1, there were 550,000 addresses with 1,000 to 10,000 btc, and as of May 24, these addresses were about 100,000.

The analyst pointed out: "Accumulating huge wallets is no longer accumulating, wallets that were once huge holdings are selling, and some slightly smaller wallets are accumulating. Over time, this is in price. is unsustainable. It takes huge wallets to drive demand to get higher prices.”

Among other things, miners began “spending bitcoin” on May 11, Ben Lilly noted. From May 11th to May 16th, the sales of miners increased. Based on this data, the analyst said, "It's important to look at prices on May 11 because that's when the sell-off really kicked in."

JarvisLabs pointed out on May 23 that ByteTree data on miners (the best reliable source for miner spending and generation) indicated that in the past few weeks, their spending exceeded output.

So, what happened over the weekend has actually been accumulating for months, plus there is an element of "market movers" "crushing" Bitcoin's price when it needed critical support.

Ben Lilly sums it up as follows: "Now, it all boils down to the fact that the whales have been selling for a while, and the miners were selling before Musk tweeted and the whales were selling, and at the same time, some sharks (market movers) were shorting the market, Combined with the whales and miners selling off it has contributed to the weakness in the market.”

The original text comes from bitcoinist, compiled and organized by Blockchain Knight, the English copyright belongs to the original author, please contact the compiler for Chinese reprint.

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