What the hell is the reason for this fall in bitcoin markets?
Are we at the end of the very short bull run? or this is just a short-term correction?
Those were the questions that crossed my mind when I was watching the bloodbath on crypto markets with the stink eye. And I'm sure that many of you guys are no different.
Just a small reminder: On February 22th, Bitcoin dropped from 57k-58k all the way to 47k-48k, sparking big waves of FUD and making some people wonder if we're at the end of the current bull run. And now, it's still swinging around 46k-47k levels.
Truth is, I was also so interested to learn the reason for such an awful crash and more interested to learn if we have to expect other crashes in the future, so I spent the last two days searching into this topic.
What is the real reason for this crash?
Well, first of all, We've witnessed huge surges in the last few weeks with almost no correction, so it only makes sense to expect one or two soon or later. However, the direct reason for this recent dump seems to be 2FPOOL.
As you can see in the snapshot below, on February 22th, 2FPOOL sent over 3,600 BTC from their Bitcoin Mining wallet directly to the exchanges and after just a few hours, they sent another 1,000 BTC, causing unexpected increases in supply and decreasing the price.
There is speculation that they did this on purpose to manipulate markets and rebuy more BTC from the dips, while others think they simply did so to cover some of their expenses. Anyhow, "that is neither here nor there".
What I really care about right now is learn if we are likely to witness similar incidents like the one we saw just a few days ago.
After all, No one will be happy to see their cryptos falling in a matter of hours, Right?
Are we likely to see similar crashes in Bitcoin markets?
If we are talking about mining pools, according to Glassnode, the balance that is held in all miner wallets is under the lowest level since March 2020.
So, perhaps, we may not expect many "miner supply" shocks in the future, or at least for the time being.
As you guys know, Tesla, Microstrategy, Paypal, and other companies have been accumulating BTC for the recent months and acquired big amounts of it at 20k-30k levels.
I just wonder what could happen if one or more of these companies decided to take some of their profits especially knowing that they've already made huge gains from their investments.
If we take Tesla, for example, they allocated $1.5 billion to buy bitcoin around the price of $30k-32k, so I guess they acquired 45-50 thousand of BTC. This is more than ten times what was sold in the recent dump.
And according to CNBC, Tesla has made about $1 billion in profit from its bitcoin investment, meaning that it made more money on bitcoin than on electrical cars for the same time frame!
So, it will not be strange to predict Tesla selling some of its holdings.
And if there was a lesson to learn from the recent bloodbath is that despite how liquid Bitcoin Markets have become, they are still nowhere near being able to ingest such a massive dump all at once.
In my humble opinion, it's hard not to expect some similar bearish moves in the coming weeks...
Final thoughts:
After reading this post, please, don't get me wrong. My goal here is NOT to spread FUD. In fact, I'm still so bullish on Bitcoin and the wider crypto space in the long term, but I think we have to pay more attention to those "new big whales" as they have a great influence on the whole market.
After all, companies like Tesla, Microstrategy, and others don't really care about the future of Bitcoin as much as they do about their sweety "bottom lines".
What do you guys think about the recent drop in the crypto market?
I'm really keen to know your opinions and thoughts...
Thank you for reading :))