The cryptocurrency market has seen a bloody trend the last few days, with Bitcoin leading the way down this time. The number one cryptocurrency has so far crashed from over $10,000 to as low as $7,500. Several questions have been asked as to why such a crash is coming at precisely the same time that Bakkt, the long-awaited institutional investment platform is launching.
While no clear answer has been given on the timing of the crash, on-chain data suggests that the bulk of those selling due to the crash are those who have not held BTC for more than 30 days. According to On-chain market intelligence company Glassnode, the sell-off was not from long term holders but rather just short term holders.
Short term large sellers?
The sell-off that led to the current Bitcoin crash seems enormous as the asset crashed over $3,000 in a few days only. CoinList Co-Founder and President Andy Bromberg in an interview with Bloomberg said the sell-off was mainly from larger investors or institutions as nearly all the money flow came from derivatives exchanges rather than spot exchanges.
Glassnode used Average Spent Output Lifespan (ASOL) to measure how long BTCs being sold have been held. The ASOL is a measure of the average age (in days) of BTCs before they get sold. With the recent on-chain information, does it mean institutional investors who bought recently in anticipation of Bakkt launch were selling immediately following the launch?
Is price bound to bounce back?
For long term holders and intending investors in BTC, it might be a relief to find out that no long term holders have participated in the sell-off that led to the current crash. This means those who have been in the space for longer than 30 days still remain loyal to holding the number one cryptocurrency.
If long term holders are still around, does it mean price may bounce back soon? Some members of the cryptocurrency community have always looked forward to a retrace like this as an opportunity to buy into the market. This is, therefore, a positive development for some people, but they may be hoping for a bounce-back soon.
