Elon Musk and COVID-19 have something in common: both of them panicked investors at least once to sell their Bitcoin (Bitcoin) Shareholding.
In the first six days, as Musk doubled his views on the chaotic Bitcoin, the similarity further increased. The billionaire entrepreneur had an argument with top cryptocurrency advocates (including the podcast Peter McCormick) on Twitter last weekend when he projected his favorite token Dogecoin (Dog), better than Bitcoin.
Annoying topics like this make me want to concentrate on the governor
-Elon Musk (@elonmusk) May 16, 2021
At some point in time, Musk almost admitted that he would let Tesla offload the $1.5 billion investment in Bitcoin in February. At the same time, with every tweet from Musk, bids for flagship cryptocurrencies have been declining. First, they reached $50,000, then fell below $45,000, and eventually fell to the lowest point close to $42,000.
Musk later clarified that Tesla did not sell its Bitcoin holdings.
To clarify the speculation, Tesla did not sell any Bitcoin
-Elon Musk (@elonmusk) May 17, 2021
But his clarification cannot offset Bitcoin’s downward bias. When measured from its all-time high of nearly $65,000, the cryptocurrency eventually extended its bearish correction to more than 35%.
This also marks one of the fastest and deepest top-down retracements in cryptocurrency’s recent history. On-chain indicators show that its impact on market bias is as severe as that caused by the Black Thursday in March 2020. . After the coronavirus pandemic.
At the same time, the blockchain analysis platform Glassnode Reported It reduces the profitability of Bitcoin’s circulating supply through its proprietary indicators.
“BTC Profit Percent Supply (7d MA)” showed that the reading in London on Tuesday morning was close to 81.122, the lowest level since October 2020. During the crash in March 2020, the reading was also very weak, with Bitcoin falling by more than 50%.
More on-chain indicators point out that the current Bitcoin price plunge led by Musk is similar to the readings seen during the coronavirus panic in March 2020.
For example, the Bitcoin transfer volume tracker on Glassnode display BTC inflows from all exchanges have surged. Its scale is comparable to the inflow of funds seen in the March 2020 sell-off and the distribution of the PlusToken Ponzi plan in 2019.
Higher BTC inflows indicate that traders are more likely to sell these tokens in exchange for other assets (including fiat currencies and altcoins). Conversely, higher outflows indicate that traders are willing to hold BTC for a long time.
Institutional sentiment and retail sentiment
At the same time, Glassnode’s Bitcoin transfer volume data provides two distinct investment prospects between retail and institutions. In the weekly newsletter, the analytics platform breaks down its observations based on inflow/outflow data collected from the two largest cryptocurrency exchanges in the world: Binance and Coinbase.
Binance is a non-U.S. entity that mainly attracts retail traders and investors from all over the world. At the same time, Coinbase has a higher status among US institutional investors. Glassnode pointed out that during the market crash led by Musk, Binance was the largest recipient of Bitcoin inflows.
Glassnode wrote in its weekly report: “This further shows that recent capital inflows may be driven by new entrants (panic sellers) and may be due to the rotation of capital to other crypto assets.”
Ki Young Ju, CEO of South Korea-based blockchain analytics platform CryptoQuant, also famous Most BTC funds flowed into Binance, adding that this is not necessarily a bearish signal.
He added: “I have to wait until the incoming signal cools down.”
On the other hand, since the cryptocurrency broke the $20,000 price milestone last year, Coinbase has recorded a higher outflow of new bitcoins. This trend continued even this week, indicating that institutional investors are absorbing the selling pressure of the retail market.
In other words, wealthy investors bought Bitcoin at local lows, while ordinary investors sold it under Musk’s influence.
Early investor Anthony Pompliano said in a report to clients on Monday: “Don’t listen to what they say.” He added:
“Just pay attention to what they do with their money. Elon Musk and Tesla understand that they will rely on the development of Bitcoin. If they are actually buying more at low prices now Bitcoin, or at least planning to buy more Bitcoins in the future, will not surprise me.
Pompriano added that Bitcoin is still the best-performing macro asset, and it is a “peak predator” that far outperforms the market in stocks, bonds, real estate and commodities. Twitter CEO Jack Dorsey’s payment company Square added Bitcoin to its balance sheet to overcome inflation concerns. He also noted on Friday that his team will “work forever” to make Bitcoin is getting better.
These comments are in stark contrast to Musk’s support for Dogecoin. Senior investor Paul Santos (Paul Santos) write In his Seeking Alpha article, Tesla CEO may hope to make money out of thin air by taking advantage of the so-called cryptocurrency euphoria.