Crypto markets have stabilized after last week’s bloodbath and on-chain asset movements may suggest that institutional investors are starting to load up on bitcoin again.
Crypto markets have been hammered over the past two weeks, dumping 25% or almost $500 billion since the beginning of the month. The rout culminated on Friday with a yearly low in market cap below $1.3 trillion, but things took a breather over the weekend with many crypto assets even posting marginal gains.
Sharp market downturns are not always bad news as they provide entry points for investors seeking longer-term gains. That appears to be what is happening at the moment according to CryptoQuant CEO Ki Young Ju.
The blockchain analytics firm chief said that “institutional investors are buying BTC via market makers right now.”
Q. Are institutional investors selling
A. They're buying via market makers right now.
Here's what happened last week ??
— Ki Young Ju ??? (@ki_young_ju) May 16, 2022
Exchange movements suggest bitcoin accumulation
Ki Young Ju delved into coin movements on major exchanges over the past week to arrive at his conclusion.
On-chain analytics revealed that the market makers who use the Gemini exchange sent around 84,000 BTC to from May 7 to 10, hitting an all-time high.
He added that the majority of selling pressure came from COINBASE as they had the largest BTC inflows from Binance. BTC/USD spot trading volume on Coinbase hit a yearly high while the Coinbase Premium tapped a three-year low of -3%.
He concluded that market makers had already sent around $2.5 billion worth of bitcoin to exchanges last week, adding: “Not sure they finished selling, but it is highly likely for the accumulation from institutions since Coinbase digested the majority of selling pressure.”
Around three-quarters of the trading activity on Coinbase is institutionally driven according to its most recent revenue report
Luna Guard Foundation was one of those major sellers, having sent around 80,000 BTC to Gemini and BINANCE last week at the time of the collapse.
Ki Young Ju summarized that “institutions tried to stack BTC from $30k but had to rebuild the bid walls at 25k due to the unexpected LFG selling.”
Markets take a breather
There has been a marginal gain for most crypto assets over the past 24 hours as the total market cap added 2.8% to reach $1.36 trillion according to CoinGecko. However, the pain may not be over just yet and the longer-term trend is definitely downwards.
The temporary breather could be a sign of a minor accumulation period but as in previous cycles, bear markets are usually drawn out over a year or two.
Total market capitalization is currently 56% down from its $3 trillion peak in Nov, so a final capitulation wick and a longer period of consolidation could still be on the cards.
