Big Institutions Sold $5.5 Billion Worth of Bitcoin Since May — And We're Still Here

Since May 10, as many as 236,237 bitcoins, worth $5.452 billion as of this writing, have been sold by “large institutions” — mostly as a result of forced sales.

Arcane Research analyst Vetle Lunde took to Twitter to detail how and when many institutional bitcoin holders started selling their bitcoins. "It all started with Do Kwon," Lunde said.

The Luna Foundation Guard (LFG), which controls the funds for the Terra project, dumped 80,081 BTC in May but failed to protect the peg of its native TerraUSD Classic (USTC) stablecoin.

The collapse of Terra appears to have put selling pressure on some Bitcoin miners. According to Lunde estimates, miners sold 19,056 bitcoins between May and June. In some cases, miners sold more than monthly production, possibly drawing on reserves.

Elon Musk’s Tesla also hit the red button as miner selling peaked, selling 29,060 BTC at the end of the second quarter, Lunde noted. Meanwhile, cryptocurrency investment firm Three Arrows Capital (3AC) is over-leveraged, owing lenders 18,193 BTC and 22,054 BTC worth of other cryptocurrencies.

Lunde also added that the massive redemption of 24,510 bitcoins by the Canada-based Purpose bitcoin exchange-traded fund (ETF) at the end of June "caused further selling pressure in the market." 51% of.

BTC market growth

While the crypto market has faced significant institutional selling pressure in recent months, the Bitcoin market has remained remarkably resilient.

During the 2022 market downturn, trading volumes will remain high compared to the peak of the bull market in 2017. According to data from CoinGecko, on December 17, 2017, Bitcoin’s daily trading volume reached a cycle peak of $12 billion, and in July 2022, the daily trading volume was above $20 billion.

Yongjin Kim, CEO of Singapore-based market maker Presto Labs, agrees with Lunde that the liquidations of 3AC and others contributed to the sharp drop in bitcoin prices in June, but he believes bitcoin prices will recover in the coming months to $30,000.

On Thursday, he told Cointelegraph that “these liquidations have pushed the price of Bitcoin below the basic equilibrium price,” leading him to believe that the price will return to $30,000 “in the next few months.”

Kim added that it will take time for retail investors to regain confidence in cryptocurrencies after what they have experienced over the past few months, by which time institutional investment will pick up again:

“I think the sentiment among retail investors has completely collapsed, so it will take us a while to regain confidence in the market. But there will be some reversal towards the end of the year, offsetting the liquidation.”

Summing up his views, Lunde said:

"I'm leaning in favor of forced selling and the uncertainty related to the pandemic is done for now. We're likely to be down, up and selling in a volatile environment for some time to come."