According to on-chain analyst Willy Woo, the weekend’s massive crypto selloff did not phase long-term holders as they used the opportunity to buy more Bitcoin.
What Happened: Woo broke down the events that led to Bitcoin’s fall $52,000 on Sunday, following the largest single-day drop in mining hash rate since November 2017.
On April 16, 9000 BTC was sent to crypto exchange Binance from a large holder with a closer knowledge of power outages on the Chinese Bitcoin mining network.
“I'd note that Binance serves volume from Asia more than the West. It's likely this was sent in from a whale with closer knowledge to happenings in China,” said Woo.
The on-chain analyst also pointed out that this massive selloff was compounded by a sell-off on quarterly futures in derivative markets, which had been underway since April 13.
“The two combined sell pressures was sufficient to tip the price below liquidation levels ($59k),” he said, adding that “This triggered a cascade of automatic sell-offs in a chain reaction.”
Why It Matters: The resulting impact was $9.3 billion contracts belonging to over 1 million trader accounts being liquidated.
Despite the massive selloff, Bitcoin’s price recovered to $57,520 at the time of writing, supporting the assumption that some saw this as a huge buying opportunity.
“The on-chain SOPR metric near a full reset. A classic buy the dip signal,” noted Woo, explaining that as profit-taking by long-term investors is completing, there is very little sell power left unless investors want to sell at a loss from their entry price.
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
Trade confidently with insights and alerts from analyst ratings, free reports and breaking news that affects the stocks you care about.
