Vetle Lunde, an Arcane Research analyst, revealed the number of Bitcoins institutional investors have sold since Terra’s devastation. This has essentially wiped out the entire crypto market. According to his estimates, Tesla sold 29.060 BTC for an average price $32,209 per month in May.
Lunde believes that the massive institutional meltdowns of the past two weeks began with Terra’s May 10th collapse – Do Kown selling over 80K BTC in order to protect the UST peg.
The contagion spread rapidly throughout the industry, increasing the selling pressure and leading to large institutions selling 236,237 BTC. Lunde pointed out that the number doesn’t include natural capitulation or hedging activities that often occur during crypto bear markets.
In the midst of markets going down, public-traded miners were forced to sell their Bitcoin holdings. They sold a total 4,456 BTC that month. According to Lunde’s estimates, Tesla sold 75% its BTC holdings. This could translate to 29,060 BTC. Tesla still has 9,686 BTC, down from 43.053 as of February 1, 2021.
Tesla’s 10% sale of its holdings in order to “test liquidity” in Q1 2021, when Bitocin rallied was a significant factor in the new break-even price for Bitcoin. It dropped from $34,841 down to $33,325. Tesla suffered only a small loss in May, when it executed the large sales.
Bankruptcies Hitting Lending Firms
The CPI index rise in June was the main selling pressure. This “bankrupted several whales already under stress after Luna’s collapse.”
3AC’s collapse impacted already-troubled creditors like Celsius and Voyager who both filed bankruptcy the next month. According to court documents, the Singapore-based hedge fund owed lenders 18,193 BTC as well as digital assets equivalent to 22,054 BTC.
3AC’s huge liquidation dragged down the entire market. Canadian Purpose ETF also redeemed 24,510 BTC from June 16th to 20th, further aggravating the market selloffs. The primary cryptocurrency fell below $17,700 on June 19th.
Lunde concluded that the capitulation phase of the last two months was over. Lunde concluded that the extent of the market selloff could be worse than what he had previously covered due to “underwater retailers and institutions capitulating.” However, he believes the relief rally is a sign that market uncertainty is decreasing.
Chapter 11s, 3AC court papers, normalization of stETH/ETH prices, and relief rally I have seen over the past few weeks all indicate that contagion has been resolved. There are less uncertain times ahead. pic.twitter.com/dAwlyy2boR
— Vetle Lunde (@VetleLunde) July 21, 2022
Marla Brooks – Financial Analysis
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