According to a Twitter thread by Vetle Lunde, an analyst at crypto analysis firm Arcane Research on the 21st of July, big institutions have sold at least 236,237 bitcoin since May 2022.
Lunde says it all started in May when Terra sold over 80k BTC to save the UST peg. Also, due to worsening market conditions, public miners sold a total of over 19k BTC, selling about 4,400 in May and about 14,600 in June in order to improve liquidity.
“236,237 BTC. That’s the amount of known selling of bitcoin since May 10th by large institutions. Most of the selling is related to forced selling, and some is not, The 236,237 BTC number is derived from massive institutional blow-ups and other large known selling seen in the last two months. The number does not account for other natural capitulation and hedging activity that usually occurs during crypto bear markets.”
Notably, while Lunde thinks that the selling during this period exceeds his estimates, he believes that contagion-related selling is done for now.
Tesla has sold 75% of its bitcoin holdings
Tesla revealed in its latest earnings report which was published late Wednesday that it had sold the majority of its Bitcoin holdings in the second quarter of the year.
As of June 30, the firm held only $218 million in digital assets, down from more than $1.2 billion in March. The electric car giant revealed that it had converted “approximately 75%” of its Bitcoin holdings into fiat currency. The report stated that the Bitcoin sale had “added $936 million of cash” to the company’s balance sheet.
While Tesla did not clarify whether it had sold Bitcoin at lower prices than it had originally bought, it noted Bitcoin had been an “impairment” that had negatively affected profitability.
However, Tesla CEO Elon Musk yesterday said that his company’s decision to sell most of its Bitcoin holdings shouldn’t be taken as some verdict on the flagship cryptocurrency.
Musk explained that Tesla had to liquidate its holdings because the company was concerned about its overall liquidity due to shutdowns in China.
The centibillionaire also said that the company was open to increasing its Bitcoin holdings in the future. He revealed that the firm had not reduced its Dogecoin holdings.
Recall that Tesla announced that it had purchased $1.5 billion worth of Bitcoin in February 2021, pushing the price of the flagship asset to new highs.
In May 2021, the Elon Musk-led company stopped accepting Bitcoin as a payment method due to climate-related concerns. The announcement caused a major market correction at that time.
Bottom line
The sale of bitcoin in gigantic proportions by major institutions has largely been caused by the downturn of the crypto market.
The digital asset space has had a forgettable six months into 2022 and the downward spiral of market prices has caused losses for companies holding cryptocurrencies, which has pushed many of them to sell at loss.
However, after a difficult couple of months, the crypto markets staged a rally over the last one week, pushing the market cap above $1 trillion.
Going forward, we expect the market to range in the short term. The macroeconomic conditions and crypto market correlation with US equities are going to be the key market drivers.
