Large institutions sold $5.5B BTC in May
Large global companies are selling their BTC shares amid the crypto winter. Arcane Research analyst explains the impact
By Shashank Bhardwaj
Since May 10, 'large institutions' have sold up to 236,237 Bitcoin (BTC), worth $5.452 billion, mostly due to coerced selling. The figure depicts the massive institutional sell-offs and other large sellings in the last two months. The figure does not take into account other natural capitulation and hedging activity that occurs during crypto bear markets. Arcane Research analyst Vetle Lunde's Twitter thread delves deeper into the situation.
According to Lunde, "It all started with Do Kwon. As LFG reached its initial $3bn BTC reserves target, it took 5 days before UST’s peg was in shambles, and the 80k BTC reserve was deployed in a desperate attempt to save the peg. Luna collapsed, leading to contagion and more sell-side pressure."
The Luna Foundation Guard (LFG), which controlled funds for the Terra project, dumped 80,081 BTC in May. It was the result of a failed attempt to protect the peg of its native TerraUSD Classic (USTC) stablecoin. The deteriorating market conditions have also had a negative impact on Bitcoin (BTC) mining profitability, forcing miners to liquidate their BTC holdings.
In the first four months of 2022, public BTC mining firms sold 30 percent of their mined production, which increased threefold in May. Furthermore, it was reported that public Bitcoin mining firms sold 100 percent of their BTC production in May, compared to the usual 20-40 percent previously.
Lunde added on Twitter that as miner selling peaked, Elon Musk's Tesla also hit the red button, which sold 29,060 BTC by the end of Q2. He said, "Around the same time, Tesla sold 75 percent of its BTC holdings. We estimate Tesla’s sales to be 29,060 BTC at an average price of $32,209…Tesla’s new break-even price of BTC was approximately $33,325, meaning that Tesla sold at a slight loss."
It should be noted that during the same period, Three Arrows Capital (3AC), a crypto investment firm, was over-leveraged and owed lenders 18,193 BTC as well as other coins worth 22,054 BTC. Lunde also mentioned that Canada's Purpose Bitcoin ETF (BTCC) saw its Bitcoin (BTC) holdings fall by half in a single day, indicating a worryingly waning buying sentiment among the crypto's most seasoned investors. This, in his words, caused 'further fire sale pressure in the market.'
According to Yongjin Kim, CEO of Singapore-based market maker Presto Labs, 'those liquidations pushed Bitcoin price below the fundamental equilibrium price.' He expects prices to return to '$30,000 in the next few months.'
Shashank is the founder at yMedia. He ventured into crypto in 2013 and is an ETH maximalist. Twitter: @bhardwajshash