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.
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