In a recent Twitter thread, Arcane Research analyst Vetle Lunde revealed how many institutional Bitcoin investors had sold since the Terra carnage began, thus sinking the entire crypto market. In his estimation, Tesla sold 29,060 BTC at an average price of $32,209 in May.
Forced Sale
In Lunde’s opinion, the massive institutional blowouts in the last two months began with the collapse of Terra on May 10, when Do Kown sold over 80K BTC to defend the UST peg.
Since then, the contagion has spread rapidly throughout the industry and has deepened the selling pressure, leading to large institutions selling 236,237 BTC. Lunde noted that “the number does not take into account other natural capitulation and hedging activities that typically occur during crypto bear markets.”
Amid deteriorating markets, publicly traded miners were pressured to offload their Bitcoin holdings, selling a total of 4,456 BTC in the month. Meanwhile, Tesla sold 75% of its BTC holdings, which could translate to 29,060 BTC, according to Lunde. estimate. Tesla still has 9,686 BTC, down from 43,053 on February 1, 2021.
Considering Tesla sold 10% of its previous holdings to “test liquidity” in Q1 2021 as Bitocin rallied, the EV giant’s new BTC breakeven price dropped from $34,841 to roughly $33,325. Therefore, executing the big sales of May this year, Tesla only suffered a slight loss.
Bankruptcies Hitting Loan Companies
In June, prevailing selling pressure first came from the rise in the CPI index, which sent the asset price south again, “bankrupting several whales already under pressure after the Luna collapse.” In particular,
The collapse of 3AC hit already-troubled lenders like Celsius and Voyager, which filed for bankruptcy the following month. The Singapore-based hedge fund owed lenders 18,193 BTC and other digital assets equivalent to 22,054 BTC, according to leaked court documents.
In addition to the massive 3AC selloff that dragged down the entire market, the Canadian Purpose ETF swapped 24,510 BTC between June 16 and 20, further exacerbating market selloffs. As a result, the top cryptocurrency even dipped below $17,700 at one point on June 19.
The last two months had been a phase of capitulation, Lunde concluded. The extent of the market sell-off could have been worse than he had covered due to the “capitulation of institutions and underwater retail.” For now, He believes the ongoing relief rally has indicated contagion is resolving as market uncertainty subsides.
Chapter 11, 3AC court documents, the normalization of the stETH/ETH price, and the relief rally seen in recent weeks tell me that the contagion is resolving. Less uncertain times lie ahead. pic.twitter.com/dAwlyy2boR
— Vetle Lunde (@VetleLunde) July 21, 2022
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