May 23, 2021
Wednesday’s price collapse of Bitcoin marked the largest liquidation event in cryptocurrency’s history. An analyst who continues to solidify his reputation with timely on-chain signals believes he has discovered the underlying cause of the crash.
Will Clemente says that a significant portion of the BTC sold during Wednesday’s collapse came from large investors who held coins that were between “one week to one month old.”
The on-chain analyst adds that the entities that did the most selling on that day were large Bitcoin “whales” who unloaded tens of thousands of BTC.
“By size, the cohort I saw the most selling from was entities with at or over 100,000 BTC. This cohort was reduced by 89,000 BTC on Wednesday,” Clemente writes.
As for the buyers of the massive BTC supply, Clemente reports a new breed of whales absorbed most of the selling pressure.
“The cohort that did the most buying throughout the dip was entities holding 10,000-100,000 BTC. This cohort added 122,588 BTC to their holdings in aggregate on Wednesday. One interesting note: a lot of buying was coming from the west (US). I say this because at one point during the bounce, Coinbase was trading at a $3,000 premium to other exchanges. This means western buyers on Coinbase were spamming the green button.”
Clemente’s analysis jives with what many have been saying for days: Wednesday’sliquidation event was planned and coordinated manipulation of the BTC market. Large volumes of coins were bought by whales weeks ago for the purpose of crashing the market to buy back in at a discounted price.
As Clemente notes, addresses holding 10,000 to 100,000 BTC added over 120,000 BTC to their holdings the day after the collapse.
According to Clemente, the current volume distribution does not remotely resemble the previous bull market tops. He concludes by writing that while the dip was unexpected, it was necessary to keep the bull market sustainable.
“We have a large leverage reset and wipeout of weak hands. At this point, it’s just going to take some time for those young coins recently sold to find a new home. Still bullish for the remainder of the bull run.”