Why did Bitcoin crash last week?
The Bitcoin market crashed badly following the uncertainty caused by the COVID-19 pandemic. The new report published by Chainalysis shows that institutional investors were more responsible for driving the crypto markets down rather than retail traders.
The leading asset loses half of its value since the start of the year. From March 12, the price saw a bearish trend as crypto exchanges witnessed high volumes. The trading platforms received Bitcoins mostly from the people who wanted to sell the assets. Chainalysis, the crypto analytics platform, reveals that exchanges credited with 475,000 on March 12 and 13. This number is nine times higher than the normal activity on the crypto trading sites.
The report reads:
‘’Transfers of 10-100 and 100-1,000 bitcoin were in total responsible for around 70% of all bitcoin sent and received by exchanges in recent days, a similar but slightly higher share than usual. Around 10% of bitcoin was from transfers of over 1,000 bitcoin.’’
Besides Bitcoin, the traditional markets also went down to their lows. Both traditional and digital assets performed the same as a result of widely spreading Coronavirus. The panic of COVID-19 is leading towards another financial crisis, according to many macroeconomics.
During critical conditions, Bitcoin mostly performed well per the past data, but this time, the safe-haven asset lost half of its value in critical situations amid global turmoil. The report reveals that professional investors sent a burst of Bitcoins to exchanges for sale. However, they were accompanied by small level retail BTC holders.
‘’These trends suggest that the deeper pocketed professional traders and investors were driving the market, but they were joined, both on the selling and the buying, by a large number of retail holders.’’
The document, specially dedicated to Bitcoin’s recent move, does not predict the price value in the next coming days. This is because there is a lot of panic among investors, as Coronavirus jeopardizes the world economy.
‘’Given the uncertainty around the COVID-19 pandemic, it’s hard to predict where the bitcoin market will go next.’’