Bitcoin price drop of $ 64,000 compared to Black Thursday, but Coinbase outflows suggest accumulation

Elon Musk and COVID-19 have something in common: Both have panicked investors – at least once – about depositing their Bitcoin (BTC) holdings.

The similarities have increased in the past six days when Musk doubled his perspective, inducing chaos towards Bitcoin. The billionaire businessman was embroiled in a Twitter feud with top crypto advocates, including podcaster Peter McCormick, over the weekend. by projecting their favorite token, Dogecoin (DOGE), superior to Bitcoin.

At one point Musk almost admitted that he would get Tesla to ditch the $ 1.5 billion investment he made in Bitcoin in February. Meanwhile, the bids on the flagship cryptocurrency were falling with each of Musk’s tweets. First they hit $ 50,000, then less than $ 45,000, and finally hit a low point near $ 42,000.

Bitcoin price drop of $ 64,000 compared to Black Thursday, but Coinbase outflows suggest accumulation
Bitcoin price drop of $ 64,000 compared to Black Thursday, but Coinbase outflows suggest accumulation

Musk later clarified that Tesla had not dumped its Bitcoin holdings.

However, its clarification was not intended to offset Bitcoin’s bearish bias.. The cryptocurrency has expanded its bearish correction from its all-time high of nearly $ 65,000 to over 35%.

It was also one of the fastest and deepest vertical pullbacks in recent cryptocurrency history.On-chain indicators show that the impact on market distortion was just as bad as that caused by the fall of Black Thursday in March 2020 as a result of the coronavirus pandemic.

In the meantime, the Glassnode blockchain analytics platform reported a decrease in revenue from Bitcoin’s circulating supply through its proprietary metric.

The “BTC Supply Percentage Profit (7d MA)” showed values ​​close to 81,122 in London on Tuesday morning, the lowest level since October 2020.. Readings were also weak during the March 2020 slump, which saw Bitcoin dropping more than 50%.

Percentage of the offer in circulation of profit over an average period of 7 days. Source: Glassnode

Other on-chain indicators suggest similar values ​​between the current Bitcoin price decline led by Bitcoin and the one that occurred in March 2020 amid the coronavirus panic.

For example, The Bitcoin Transfer Volume Tracker on Glassnode showed an increase in the BTC inflow on all exchanges. Its scope was comparable to the inflows seen during sales and distribution in March 2020 through the Ponzi PlusToken program in 2019.

Volume of net Bitcoin transfers to / from cryptocurrency exchanges. Source: Glassnode

A larger influx of BTC indicates a greater likelihood that traders will sell these tokens for other assets, including fiat and altcoins. On the contrary, a higher outflow shows the willingness of traders to hold their BTC longer.

Institutional sentiment towards the retailer

Glassnode’s bitcoin transfer volume data offered retailers and institutions two very good investment prospects. In its weekly newsletter, the analytics platform has broken down its observation based on input / output data collected from two of the world’s largest cryptocurrency exchanges: Binance and Coinbase.

Binance is a non-US company that primarily attracts retailers and investors from around the world. Meanwhile, Coinbase’s position is highest among US-based institutional investors. Glassnode noted that Binance was the largest recipient of bitcoin inflows during the Musk-led market crash..

“This is new evidence that recent inflows are likely to be driven by both new entrants (panic sellers) and possibly capital turnover in other crypto assets.”Glassnode wrote in a weekly note.

Ki Young Ju, CEO of CryptoQuant – a blockchain analytics platform based in South Korea – Likewise pointed out that most of the BTC inflows went to Binance, adding that this is not necessarily a bearish sign.

“I’ll wait for the inflow signal to cool down”he added, however.

Net bitcoin transfer volume to / from Binance. Source: Glassnode

On the other hand, Coinbase has seen higher bitcoin outflows since the cryptocurrency crossed the $ 20,000 milestone last year.. The trend continued this week as well, showing institutional investors absorbing selling pressure from the retail market.

Bitcoin balance on all exchanges vs. Coinbase vs. Binance. Source: Bybt.com

The scenario is still bullish.

In other words, wealthy investors bought bitcoin at local lows while the average sold them under the influence of Musk..

“Don’t listen to what they say”said investor Anthony Pompliano in his statement to customers on Monday. And he added:

“Just watch what you are doing with your money. Elon Musk and Tesla understand that they will depend on Bitcoin in the future. I wouldn’t be surprised if they actually buy more Bitcoin now at depressed prices, or at least plan to buy it.” ” more. s in the future. “

Pompliano added that Bitcoin remains the best performing macro asset, an “apex predator” that has clearly outperformed stocks, bonds, real estate and commodities. The CEO of Twitter, Jack Dorsey, whose payment company Square added Bitcoin to its balance sheet to overcome inflation fears, He also noted on Friday that his team would “always work” to make Bitcoin better.

These comments are in contrast to Musk’s support for Dogecoin. The veteran investor Paul Santos wrote in his article “Seeking Alpha” that the Tesla CEO may want to make money out of nowhere by exploiting the so-called cryptocurrency euphoria.

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